“Once you open up the possibility that people are not only using the web as a platform to produce their own individual content, but also to pool their efforts, knowledge, and resources without expecting any sort of payment or compensation, the possibilities for what they can create are astounding.”
Yochai Benkler, The Penguin and the Leviathan
*Part 2 of a 2-part essay series on digital public goods. This essay follows “The [Public] Good, The Bad, & The Ugly.”
In this essay, I further develop the theoretical perspective that a new economic system of exchange on the Internet—one based on the provision of digital public goods—will help combat the restriction and stagnation imposed by platform monopolists, and unleash the full potential of human knowledge and culture. To do this, I address the following questions:
What is different about today’s Internet that allows for this imposition on the current capitalistic paradigm?
What makes this change so imminently necessary?
I argue that new forms of blockchain-based ownership and organization facilitate the autonomy and pooling of risk required to support collaborative networks of peer production—networks organized into decentralized autonomous organizations, or DAOs. Together, these transformations will bring about the proliferation of digital public goods, thereby freeing information, expanding knowledge, and diversifying culture.
The Shifting Sands of Digital Economic Systems
“Efficiency, in the same way, is not a virtue when it is, most of all, built on the extraction of value for shareholders and owners.”
Trebor Scholtz, Platform Cooperativism: Challenging the Corporate Sharing Economy
The Internet has irreversibly altered the ways we create and share critical knowledge. The production of digital goods relating to information, knowledge, and culture generates a completely new environment for collaboration—one that is faster, cheaper, and more global. This seismic shift has unearthed a new model of production that Yochai Benkler calls “commons-based peer production”—a model best exemplified in the open source software (OSS) movement, in which a predominant amount of participation is not determined by direct monetary return. In his words:
“[Free software] suggests that the networked environment makes possible a new modality of organizing production: 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.”
Peer production is characterized by the self-selection—rather than the hierarchical assignment—of participant actions. It follows that what this system stands to gain in openness and autonomy, it also potentially loses in organization and efficiency. Due to the resultant lack of well-defined ownership rights and excessive governance frictions, the communities that have formed around the production of OSS—as well as other forms of commons-based peer production—have been unable to form their own sustainable economies. As a result, we have seen most of these systems flounder, or become subsumed by larger, centralized, profit-driven corporations, as in the case of Microsoft’s acquisition of OSS platform, Github.
But the infrastructural changes engendered by cryptocurrency and blockchain—technologies that enable novel forms of digital attribution and organization—have presented new collaborative structures in DAOs. Through DAOs and their associated digital localities, participants are able to more efficiently and sustainably produce digital public goods.
Digital Attribution
A key innovation of blockchain technology and cryptocurrency lies in the assignment and distribution of ownership over digital goods and networks. Championing what he calls the “Ownership Economy,” Jesse Walden states that tokens let us distribute value in the same way that protocols like BitTorrent allowed us to exchange packets of information—through a permissionless, peer-to-peer network. Here, I expand this view, introducing the concept of attribution. Attribution applies to both producers (“I made this thing”) and consumers (“I bought this thing”), the value of which exists on a social layer, embedded in our relations. What we choose to consume and own is deeply representative of who we are. For the first time, this emerging technology facilitates ownership over the social and cultural capital that an individual accrues through online attribution—that is, the value of our identity, reputation, and relations on the Internet.
At first glance, the concept of ownership does not belong within the context of public goods. This is where attribution becomes so important. Today, owners of digital goods such as code, content, and media, amass value by leveraging their private property rights to keep their property private. On the other hand, attribution is associated with the right to publicly display (“flex”) value and status, best exemplified by the non-fungible tokens (NFTs) that attribute ownership over digital art pieces. NFTs allow digital goods that are otherwise easily reproduced—in this case, JPEG files—to be made exclusive, and then transacted and monetized. As a result, while everyone can see and even improve upon the art, the status and reputation that come with being able to prove ownership are both protected and imbued with value. This stands in complete contrast to existing regimes of closed-door capitalism—a system that monopolizes ownership and impairs information flows in the name of monetization.
Therefore, while access to information, knowledge, and culture goods online should remain open, the attribution of ownership should be costly. People will pay for digital goods because of the social rewards that attribution will bring them. The free consumption of digital goods even serves as a gateway to the payment for ownership and future consumption—via patronage, collection, and curation—that helps support the system.
Digital Organization
Since Coase’s famous essay, “The Nature of the Firm,” the concept of transaction cost minimization as a primary function of the firm has been well-known. These costs are incurred as a result of the frictions inherent in deciding what to do and how to do it within an uncertain environment. As a result, firms help translate this abstract uncertainty into more calculable risk by estimating consumer preferences, aggregating capital, and centralizing decision making. Updating this organizational framework for the digital age, I propose that DAOs exist to decrease the collaboration costs—transaction costs within a system of commons-based peer production—associated with organizing capital around shared values online, thereby creating an environment more conducive to the widespread provision of digital public goods.
DAOs are particularly effective at building and growing networks of aligned participants. As the entire capital base of the DAO—financial, social, and cultural—can accrue to all members, participants are incentivized to discover and invest in new, value-add members. A compelling value proposition follows: DAOs as vehicles for turning the uncertainty inherent in creative production on the Internet into risk that is spread amongst their members. Creators of digital public goods forgo direct payment in exchange for non-financial forms of compensation and the promise of future earnings. But by collaborating within a DAO, these individuals are not only able to share the associated risks, but also leverage the DAO’s network to boost product distribution and value accrual. As they share in potential upside and increase the probability of returns on their investment, creators are then able to accept greater risk. Yet, to achieve this vision, there is no question that DAOs need better decision-making processes, greater security measures, and more fair and transparent ways to direct investment towards shared goals.
Having presented the key elements of this ongoing technological shift, I will now turn towards its impact.
Externalities
“There is no clear evidence from experience that the investment policy which is socially advantageous coincides with that which is most profitable.”
John Maynard Keynes, The General Theory of Employment, Interest and Money
“Externality”—another term from economics—refers to the effects that consumption, production, and investment decisions have on the well-being of uninvolved, third-party actors. Because both negative and positive externalities are generated outside individual transactions, the respective costs and benefits are not reflected in market prices. Accordingly, externalities represent another instance of market failure—one where the behavior of “rational” decision makers can prove harmful to overall well-being and undermine the social benefits claimed from the pursuit of individual self-interest.
The government often manages externalities not addressed by the market through programs for public goods, such as environmental protection, education, and public health. Similarly, digital public goods provisioned by local Internet communities and managed by DAOs will address some of the existing negative externalities of today’s platform economy—negative externalities that simultaneously necessitate this systemic transformation. Other Internet explains:
“The social media platforms which dominate the web today…have also produced wide-reaching negative externalities: effects on third parties who did not agree to incur their costs. The externalities of platforms include incursions on personal privacy, the spread of misinformation, the devaluation of creative labor, even destabilization of the democratic process.”
I assert that the increased distribution of information, knowledge, and culture goods as digital public goods will combat these harmful effects, resulting in two positive externalities: 1) alignment of self-interested and pro-social decision making, and 2) overall improvement in quality of online content and enrichment of digital life.
Social Accountability
Writing amidst the economic crisis of the 1930s, Keynes identified that the hyper-financialization of the global economy had separated business owners from the social impact of their ownership decisions. He wrote, “Remoteness between ownership and operation is an evil in the relations among men.” While Keynes was advocating for national self-sufficiency, I leverage his ideas to argue that separating ownership from digital production for the pursuit of financial profit can negatively impact the larger social whole—in particular, when obstructing digital goods in the name of monetization decreases the production of knowledge and the potential of human collaboration.
The shift from an individualistic, profit-driven Internet, to one that fosters collaborative knowledge creation and sharing, requires not just technological change, but cultural, political, and social changes as well. Today’s platforms use arms-length, financial control mechanisms and decision-making processes to extract value from the actual producers and consumers of value. Through restrictive paywalls, predatory data collection, and profligate ads, the parasitic corporate imposition over the digital economy promotes shareholder value at the expense of social value—benefits for the few at the expense of the many. In opposition, we must reconnect ownership to value production, and thus, reconnect ownership to the social impact of production decisions.
Current centralized, top-down governance structures are designed towards the lowest common denominator of human motivation: profit. As DAOs allow individuals to direct capital towards more collective interests—mutual conceptions of worth—they enable escape velocity from the financial pull of the market. And as creators pool risk and distribute value through DAOs and their tokens, they will not only grow the underlying networks, but will also set norms for adjacent individuals and communities—norms that reflect the requirements of a digital public good economy: attribution, transparency, and communal ownership. The ability of bounded digital communities within web3 to build and innovate with each other in this way—composable localism on the Internet—uniquely enables this system to scale.
Markets, and increasingly AI, are frequently used as an excuse, or an escape from accountability. Likewise, the current authoritarian actors on the Internet evade responsibility by claiming to follow what the market, or the algorithm, dictates. By managing digital public goods through DAOs, we can regain human agency in building our best social world. As we have already seen in the OSS community, increasing the prevalence of freely available digital goods can encourage participants to change their perspectives and motivations. Offering all content and media, alongside code, to the widest possible audience—a fundamental capability of digital technology—will thus cause creators to view the Internet as it truly is: a global platform for the pooling of information and resources. Echoing Trebor Scholtz’s call to turn profits into social benefits, by promoting open access to digital goods we will shift owner incentives from creating shareholder value to driving consensus around what is actually good for the public.
Content Quality
Keynes proposed national self-sufficiency as a solution to the 1930’s crisis because within national boundaries there exists a political body to manage the negative impact related to economic activity. Similarly, a lack of social accountability mechanisms, as well as misguided metrics, within our borderless digital world has led us to a crisis of quality regarding online content and interaction. Instead, within a system of digital public goods, creators produce directly for those who reward them with attention and status, rather than succumbing to our increasingly powerful technological intermediaries. I believe this shift will help improve the quality and curation of the information, knowledge, and culture that the goods propagate.
In his book, Algorithmic Culture Before the Internet, Ted Striphas defines “Algorithmic Culture” as “the use of computational processes to sort, classify, and prioritize, people, places, objects, and ideas.” Algorithms, plus the tacit knowledge of how they work and what they value, materially affect human behavior. A good summation of the way algorithmic culture works in practice comes from Ben Thompson: “The goal is not to pick out the hits, but rather to attract as much content as possible, and then algorithmically boost whatever turns out to be good.” By distributing digital content intended to appease our algorithmic arbiters of culture, individuals end up producing for an apathetic mass audience, rather than an enthusiastic niche audience—a broken market system that does not register the utility of the goods being produced. Our appeasement of algorithms thus results in two important consequences that impair the creation of knowledge and culture: an insistence of quantity over quality, and a flight to homogeneity.
Even though Twitter is supposed to be the Internet’s town square—the place people go to get their information—Robin Sloan laments, “Twitter’s timeline is a muddle. It’s too uneven; when a user stops speaking, they disappear, and, by corollary, as a follower, you mostly encounter the users who are speaking nonstop.” This complaint is reflective of the curation provided by algorithms and the financial incentives provided by advertisements. I haven’t talked much about ads—the prevailing means of providing and monetizing free content on the Internet—because for me their impact falls in-line with that of algorithms (and because they give free content such a bad name!). The goal of algorithmic curation is to capture as many eyeballs as possible, while ads capture value from each eyeball—the ultimate purpose of algorithmically boosting Thompson’s “good” content. By promoting quantity over quality, this system thus provides misaligned incentives for producers, poor experiences for consumers, and impediments to information flows and knowledge growth. And ultimately, the infrastructure underlying the production of digital commodities has nothing to do with the actual value being produced.
Further, through a capitalistic desire for quantification and commensuration, algorithms promote homogeneity. Ben Davis understands this pervasive practice as “Quantitative Aesthetics,” particularly “in how social-media numbers (clicks, likes, shares, retweets, etc.) seep into everything as a shorthand for understanding status.” While people equate a larger number with higher value, these quantitative measurements should instead be viewed as reflecting social norms—boosting that which is common rather than above-average. Consequently, in our endless desire for growth—to see “number go up”—creators end up producing content that inevitably sides with herd behavior. Algorithms then reward these metrics with further visibility and engagement, entering a cycle of social conformity that snuffs out heterodox thinking. However, no great innovation in art or science has ever been produced by following what most people do. Davis continues, “‘Taste’ is about standing out from the average, and thus favors values that were not optimized for the greatest number of anything.” In the end, algorithms reward social imitation, rather than more diverse, potentially more socially-beneficial work.
What is at stake hear is what Striphas calls “definitional agency,” which is “the degree to which we’re empowered to explicate the terms of our lives, both individually and collectively.” Up until now we have placed our trust in centralized platforms and algorithms. This is a decision that has culminated in lower quality digital goods produced for its algorithmic superiority, instead of its value as weighed by the actual stakeholders—the human citizens of the digital world. It’s time we take that power back.
Conclusion: Towards a Pluralistic Digital World
“Any mode of coordination fit for politics will demand an ideological reeducation that establishes a moral outlook superior to American financial individualism.”
Wolf Tivy, Entrepreneurial Statecraft Gets the Goods
The proposition advanced throughout this two-part essay—that digital commodities are better off produced as public goods—changes our conception of what the Internet offers: a new system of economic exchange that incentivizes individual participation while reaping the social benefits of public goods. To accomplish this, we must eschew the hyper-individualism promoted by platform economics and neoliberal capitalism and place groups and communities back at the heart of the digital world.
We need groups of mutual exchange to support the production and distribution of digital public goods according to their shared conceptions worth. Glen Weyl calls this design “Institutional Pluralism,” where “groups are not mere vehicles for individual interests but are of fundamental interest.” Since the institution of public goods depends on determining what is “good” for the public, by giving groups the agency to more effectively display and act on their interests and beliefs, blockchain technology and cryptocurrency enables more efficient public good provision. Additionally, giving them the agency and autonomy to self-govern according to these shared values will make them the Internet’s new tastemakers—the new arbiters of culture—allowing humans to retake power from algorithms. Due to the sheer amount of information online, algorithms will undoubtedly continue to be involved, but the wisdom of small crowds will increase in importance when trying to make sense of the abundance of the Internet.
Fundamentally, in order for a public goods-based, digital economic system to usurp the current commodity-based, paywalled, ad-covered version of the Internet, the experience—from both a creator and consumer perspective—will need to be better. This shift will require significant changes to both infrastructure and UX—meaning more modular tooling that enables local Internet communities to best express their pluralistic values. And my hope is that this new digital world engenders an environment of openness and competition—one that improves social interactions and knowledge creation, creates and captures actual value, and maximizes the conditions for emergence and evolutionary improvement.
The way to reach humanity’s potential, solve our problems, and achieve infinite progress is to continually grow our pool of knowledge in order to create new ideas. To loosen the culture of monopolistic control that stands in our way, we must make a concerted effort to make digital goods—and all the information they possess—available to everyone.
Embrace modularity, embrace plurality, embrace heterodoxy.