Feature Article: P2P and the Corporation ~ Foundation for P2P Alternatives

Feature Articles / February 2005

In the material to follow I believe we have an example of the analysis that is still so underdeveloped of the lower quadrants of the integral model. While the focus is not leadership, per se, it is certainly about the cultures and systems in which leadership emerges. The immediate challenge it presents, from my point of view, is to explore the implications of this analysis for our understanding of leadership in business environments—be they corporate or otherwise. I find myself enjoying my own reflections on these ideas since Michel Bauwens presents us with a significant challenge to how we think about business leadership integrally.

This analysis raises many interesting questions for us to consider. For example, is there not a symbiotic relationship between corporations and P2P, at least in some cases? While the music and movie industries are being challenged by P2P technology, the very capacity of P2P challenges to corporate hegemony seems predicated on the existence of corporate infrastructure such as the technology it produces to make it possible for P2P to function so broadly today. This further raises the question of P2P services being provided “for free” since the cost of the technology and its infrastructures must be factored into the equation. And, instead of suggesting one displace the other that there is a synergistic relationship between the two systems and that this synergy will create a third model?

Well, these are beginnings of what seems to me a very fresh approach to understanding the hierarchy of social systems and cultures as part of holarchies of leadership, including the implications for developmental streams in all four quadrants. Perhaps in subsequent issues of Integral Leadership Review or Michel Bauwens’ P/1 newsletter (with blog to come) these questions and more shall be addressed.


I am writing these comments, prompted by Russ Volckmann of Integral Leadership Review, a consultancy that aims at training and supporting a new generation of ‘integral leaders,’ mostly within the corporate environment. His own comment was triggered by a remark of mine that argued that social change will not happen through the corporate medium, but outside of it, to which Dr. Volckmann offered the reply, “Why not see change both within and without the corporation. Why make it an either/or?”

I want to answer this remark by addressing it in a two-pronged way. First we will look at the macro scale, the economic-social system as a whole, and the role of the corporation within it, and how the corporation is affected by the fact that this environment is increasingly participative. And second, we will look at the micro level, at the contradictory ways in which peer to peer processes are integrated within the corporation.

The Participative Nature of Cognitive Capitalism,
or ‘The Communism of Capital’

In many ways, the corporation used to be viewed as an ‘atomized subject’ much like the individual in Cartesian philosophy. This subject would then autonomously undertake relations with outside subjects such as consumers, partners, suppliers, etc. According to Schumpeter, for example, innovation is clearly located within the corporation, within the practices of the entrepreneur.

This view has of course always been a fiction since like any ‘subject’ the corporation always already integrates an inter-subjective field. But we would argue that the relative autonomy that it possessed has been dramatically reduced in the last 30 years. And it is the networked technologies and human practices that are responsible for this.

Let us recall the business process re-engineering phase that started in the 1980’s, to be able to clearly contrast it with the new logic of webification affecting corporations. The BPE trend was started when analysts started to recognize that the new computer technologies were not so much used to their best effect, but merely to increase the efficiency of existing practices. BPE was about reorganizing the internal processes of companies so that they would use the new ‘internally-networked’ computers to maximum effect in order to increase the integration of processes and the cooperation of blue, but mostly of white, collar workers. Clearly, at that time companies were still viewed as ‘self-enclosed’ units. But this has changed today: webification is no longer ‘internal networkin’, but ‘external networking.’ The process of webification is responsible for a gradually increasing loss of boundaries between the inside and outside. Companies and their processes are now linked through computer webs with their partners, their suppliers and their clients (through internets and extranets), and internally employees are linked through intranets. So not only are processes interlinked and integrated across boundaries, but employees are no longer confined in their communication and they are communicating on a permanent basis with the outside. This is a first indication of the new participative nature of the economy of cognitive capitalism.

Let us now look at the process of innovation. Employees are no longer linked for life with companies. This means that their learning process has become permanent, not only through their previous experiences at other companies, but as they are working for a company they are constantly in touch with different kinds of collectives. Furthermore, in this era of ‘mass intellectuality,’ learning is no longer confined to institutions (schools) and companies, but takes place throughout the social field. How can one still pretend in this context that innovation takes place in any real sense ‘within the company?’ Innovation has become diffused throughout the social body.

Another aspect is the traditional distinction between producers and consumers. The feedback loops with consumers are increasingly taking place in real-time, not only through market research, but through the permanent communication through networked channels. The increasing adoption of open source models means that cutting edge companies are using their customer base for a co-creative innovation and adaptation process. A significant portion of contemporary consumers takes increasingly active roles in ‘hackin’ the products that they receive from companies.

Let us finally look at the new cooperative modes of production. Production is now increasingly, and essentially, teamwork across time and space. Workers are now experts, but no single expert can produce contemporary products. These workers have—and this is a real revolution for capitalism since they are knowledge workers—an increasing access to their own means of production, which is the networked computer. Managers have become experts in management and coordination, but probably less than that since the project managers play the role of coordinating production. Rather, top managers are the protectors of the ultimate goal of the corporation, which is profit making. One could argue that the role of capital and top management is becoming increasingly parasitic. The success of open source projects is of course in a sense proof that their roles are no longer ‘essential.’ Intelligence is now distributed throughout the periphery of the corporations (and in fact, as we argued, everywhere around it as well since there are no fixed frontiers between inside and outside).

In a sense corporations have become thoroughly inter-subjective in their nature. But the ownership structure of corporations does not reflect this social and cooperative nature of contemporary production.

Cognitive Capitalism and Peer to Peer

Let’s now move from the more general concept of ‘participation’ to the more specific concept of peer to peer, and how this relates to the macro-level of the economic system.

Peer to peer is not marginal to the system, but its very basis. Peer to peer is the format of the technological infrastructure of cognitive capitalism in the form of the point to point Internet in the form of the self-publishing paradigm governing the web and the many other networked forms of communication (instant messaging, blogging, etc.). Peer to peer is also the format of the workgroups that are now the mainstay of the organizational framework governing production; it is a form of social organization. It is also (see Pekka Himmanen’s Hacker Ethic) the form of the new work culture and it is the key format of contemporary subjectivation.

But capitalism itself is not peer-to-peer. Let’s make a short digression. Edward Haskell, author of Full Circle, a scientific synthesis on human evolution written in 1973, has developed a model of co-action that is useful to understand the nature of human relationships.

Interactions, he said, can be of three types: neutral, adversarial and synergistic. In game theoretical language you can win, lose, or draw. Pre-modern social relationships were essentially adversarial: feudal and other pre-modern systems were based on force with the strong expropriating surplus value from the weak. Capitalism, in theory, was a break from that. A consequence of the individualist ethic, it assumes free individuals entering into contractual relationships with each other and the owners of capital and it then assumes a series of ‘fair exchanges:’ work in exchange for salary, money in exchange for products. It assumes anonymous cooperation in the marketplace and that individual motivation for gain will lead through the ‘invisible hand’ to a better situation for all.

In Haskell’s terms capitalism is based on neutrality. In the best possible circumstances we get a win-win situation. But capitalism never looks to the outside; it can never be win-win-win. In other words, participants in capitalist exchange look at their mutual benefit, but not at the effect of their actions on the social field itself. In fact, historically, capitalism has been based on the free use of external resources and on the dumping of its waste products on the external world. It is only when coupled to democracy that an external force is capable of insuring that a corporation takes into account the outside world. By itself and through its own logic of competition it is always tempted, in fact forced, to minimize the cost of externalities, to ignore the wider effects of its action. Furthermore, in practice, despite the theory, capitalism is not based on equal exchange, since the partners are never in reality equal: workers were weaker than factory owners, colonies were weaker than their imperialist masters, and in general, the terms of trade have always been based on force and thus were never ‘fair’.

Nevertheless, despite its drawbacks, it has been socially accepted because its bias towards neutrality in relationships was better than the adversarial model, because social struggles and democracy have humanized it, and because it has enabled a tremendous growth in the productive forces.

Peer to peer is not based on neutral relationships but on synergistic relationships. Peer to peer is based on the assumed equipotency of participants. Cooperation is free and equipotency—the capacity to collaborate and contribute to a project—is proven by practice and communal verification. Peer to peer is not a gift economy in which everything is shared and where there is a give and take, but a form of communal shareholding. It is based on ‘participation,’ geared towards a common action/production that is of benefit to all, not just to its participating members.

Contradictions in the Corporate Field

Today, people want and need to collaborate and they want to find meaning in their work life. Peer to peer is an answer to these new demands and necessities, because it is based on the free association of individuals who cooperate for the common good and in the process are creating a new ‘commons.’ Corporations need this cooperation, but also fear it, and there is therefore inherent tension: can’t live with it, can’t live without it.

The ultimate aim of the corporation is to make profit and for this it has to measure value. The corporation is not concerned with the use value of products, but only with its exchange value. It will produce anything that can produce profit and in order to do that has become a formidable machine of creating mostly artificial desires.

To protect its ultimate aim of making profit corporations are organized on a feudal basis. Corporations are not democracies, but feudal organizations whether in the older bureaucratic format of the industrial era or the management by objectives of the cognitive era. Objectives are produced in a top-down format.

In the current neoliberal and deregulatory phase capitalism has created a hypercompetitive environment based on speed. Instead of exploiting the body of the worker as in the industrial era, it is now focused on the psyche of the knowledge worker. It has tremendously increased the pressure on individuals with its elusive search for zero time (no wastage of time). Stress and related illnesses are growing by the day and working hours have increased in the United States. Production and productive behavior has left the factory and office to infiltrate the daily lives of everyone. Learning has to take place ‘after hours’. The safe heaven of a fixed salary is increasingly being replaced by precarious and short-term contracts.

A corporation is not based on the common good, unlike P2P processes.

This is why the relationship between peer to peer, which it needed by the system to function effectively, and capitalism, is inherently problematic and rife with tensions.

From within, companies are not drawn to positive social change since their priority is to get the resources at the lowest possible price and to sell products and services at the maximum price allowed by the competitive environment. Pressure has to come from the outside: from the democratic polity with its regulations and through the demands of the new generations of workers that necessitate reform of working practices within the corporation.

This is why peer to peer, while growing in the corporate sector, is thriving in the social field. The dotcom crisis of 2000 was a first indication that the system was not able to harness P2P innovation to its full extent. It could not transform the ‘use value’, increasingly ‘beyond measure’ (See Note below), into exchange value. In the social field, P2P is creating a continuing stream of innovations with corporations such as the music industry vigorously opposed to them. One could argue without too much exaggeration that industry sectors such as the RIAA are pretty much in the situation of the guilds during the advent of industrial capitalism: they tried to stop, in vain, a more productive system.

P2P and Open Source production processes are increasingly making new and better ‘products’ than their for-profit counterparts. People by the millions are flocking to such projects and to the free intellectual exchange and collective knowledge production of the Internet. This is why I argued that the corporation, beholden to its shareholders, is not the cutting edge of social change, but rather a field of tension and contradiction between the cooperative nature of work and its private appropriation, between the demand for cooperative and synergetic working practices and the feudal nature of its power structure and, on the macro scale, between the win-win-win nature of P2P projects (the last win refers not to the gain of the parties involved, but to the wider social field in which they operate) and the social indifference of corporations. This is why we need new forms of cooperative organization, and eventually the instauration of the social wage to stimulate it even further. Meanwhile, through its competition with P2P processes, corporations will be forced to adapt.

Of course, one must applaud change agents within the corporation and their attempts to humanize it as Dr. Volckmann is attempting and stimulating through his Integral Leadership Review. But can they really transcend the inherently feudal nature of its power structure and the inherently a-social nature of its purposes?

To conclude, some personal experiences

I believe that today, one should speak from a subjective-objective mode of awareness, acknowledging if we can, our own biases, perspectives and experiences. My position above has been of course partly driven not by ‘objective insight,’ but by my own limitations in emotionally and cognitively processing my experience.

My first job experience was a happy one. As reference librarian and analyst for the United States Information Agency, we had a double task, to distribute the positions of the U.S. government, but also, to reflect the richness of its democratic polity by giving access to the wide variety of the opinion press. Furthermore, the ethic of service characteristic of the tradition of reference librarianship, geared to helping people in their research, was humanly very satisfying.

My second job involved three years as strategic business information manager for the top management of the agribusiness wing of a major petroleum multinational. Though I was involved in a major cost cutting (and people cutting) exercise and cultural change project, it was a good time for me, as I had the freedom to pioneer a trend-setting virtual library project. Tensions between the various factions of top management were high, but I had a neutral position, and there was nevertheless a serious amount of personal integrity in this environment.

After that, though I would successfully launch my independent career as an internet consultant, my experience would be more problematic. First within the internet publishing sector, I was witness to the willful overproduction (by 90%) of a magazine’s circulation, only to see the surplus immediately destroyed (the reason being that purported higher production meant higher advertising revenue). I was also witness to the constant pressure to adapt editorial content to the interests of the advertisers.

Then, I created two internet companies. It was a grand and stressful time, with some of the following observations: 1) genuine innovation from knowledge workers who created enormous new use value on the network; great cooperative atmospheres in many of these new ventures; 2) financial capital bent on quick gain, but resulting in a lot of destruction of new projects, which were not allowed organic growth but had to be readied, cost what cost, for the ‘casino capitalism’ of the internet bubble; 3) lots of copycat internet projects, by people without a clue, but driven by the promise of riches; 4) an enormous amount of greed, win-lose negotiations, etc…Of course, though I was personally relatively successful in selling my two companies to bigger entities, we all know how it generally ended with the bursting of the bubble. It meant that financial capitalism was not truly able to integrate Internet innovation, and a split between financial capital and the knowledge workers, many of them penniless after great riches were promised to them. Social innovation did not stop, however, it simply moved to the arena of civil society where it could grow organically and thrive.

After that, I joined a fast growing international Internet consultancy. I witnessed again, a very positive and enthusiastic project team environment with young knowledge workers intent on creating innovative products, services and processes. But also a total inability to cooperate internationally. Calling for help as a small country team meant inevitable that the larger entity would steal the project. The internal competition was deadly. The international leadership had an incredibly predatory tone (‘if your competitor is down, kick again’, ‘we’re the eight-hundred pound gorilla in the park’, are quotes I remember from a rather disgusting ‘Jerry-Springer format-like’ international video conference which was supposed to energize us, but in fact profoundly disgusted the Belgian staff.) Then, the Belgian section was put in a regional entity under Swiss leadership, who for narrow power reasons intently destroyed the local branch. In the meantime, the international entity was heading for bankruptcy, not before the international directorate had sold the best parts of the company to themselves. I want to add that though I witnessed this, I was personally still rather happy to work in an innovative environment, where I was involved in launching new divisions, thought leadership, and prospective scenario-planning. But the personal satisfaction and local cooperative sphere contrasted sharply with the internal competition and predatory environment of the larger entity.

Lastly, I would join a large Telco as eBusiness strategy director. It is there that I realized the enormous discrepancy between word and deed. I was unlucky enough that from the moment I joined, my patron had already disappeared from the scene, thus I fell through the cracks of the feudal power structure from the very beginning. The eBusiness project immediately turned out to be a political Potemkim project, used as a cover for large-scale cost-cutting, but without any substance of its own. We produced less with a team of 60 people in 3 years, than five people in the dotcom sector in three months. The leadership was so dysfunctional, that it generated enormous turnover, people loosing their hair, the taking of sedative medication. The in fighting between divisional leaders was atrocious and permanent. Employees were divided between a small leadership group which overworked and constantly involved in bickering and power struggles, and a large majority which had decided, though they may have been very innovative in their private projects at home, that in that company, they had to leave their energy and drive at the doorstep. They collectively decided to act as zombies, choosing the financial security above their job satisfaction, and you could see bright people getting dull eyes after just a few weeks in this environment.

I was told that small technical projects that my graduate students were able to pull off in a single weekend needed over 100 working days and 40-page documents to be approved. People with abilities were purposely deselected from the team. When I could no longer accept these goings on and went straight to the top to attempt to reform the process, despite promises, I got in fact the Japanese treatment (new desk facing a wall, and isolated from any communication), culminating in a death threat. At that point, I asked for a transfer. It was better, a group of small people, but nevertheless, the main activity turned out to be producing largely fake numbers (compare it to Enron), for political reasons, and these experts were proud and laughing when they pulled it off. The strategic plans of the division were purposely skewed to large and expensive investments, not because they would be successful but because it meant greater control over resources and hence more power. Incredibly, failure seemed to be rewarded at every turn. (though, after my departure, after new top management came in, they would all have to leave). Eventually, I asked to head my own think tank within the company, the proposal got accepted, but you will understand that my enthusiasm had already dwindled to a large extent.

I want to add that I was not a hostile person. I got tremendous support from rank and file co-workers, but it was all to no avail. And that in the midst of the environments I am describing, I was still rather successful in the projects I undertook. My cumulative experience, both with the macro neoliberal logic at work in world society and with the dysfunctions described on the micro level, is what would eventually lead to a re-appraisal of my relationship to the corporate world. It is because of the wider ethical environment, or rather the lack of it, and the generalization of Enron-style practices that I decided to leave the corporate world.

Now of course, it is only a personal experience. Perhaps I just had ‘bad luck.’ I drew the conclusion that after the high promises of the late seventies, when companies were told to evolve towards stakeholder policies, the eighties brought a detrimental change that became cumulative. It was the narrow shareholder interests that were to become dominant. Work and business became hypercompetitive, psychologically unsustainable, and an enormous strain developed between the emergent network models, and the fundamentally feudal nature of the core power structure.

One could also argue, it is just human nature; people have always been like this and will always be so. I could have adopted such a cynical attitude were it not for my contrasting experiences in the new civil realm of P2P cooperation.

Indeed, at the same time I was increasingly part of a social field of knowledge exchange and production on the Internet, where we not only successfully produced innovative services, but did so in an atmosphere very conducive to cooperation and job satisfaction. The creation of a large range of new use values was extraordinarily ‘meaning-producing.’ When I understood that the common format of these new ventures was the peer to peer form of exchange and that there was a clear isomorphism (same format) of its emergence throughout the social field, I decided to monitor and investigate the phenomenon, seeing it as a portent of things to come.

It has led to the creation of the newsletter P/I, and to plans to create a Foundation for P2P Alternatives, amongst other things.

Needless to say, my departure from the corporate field has greatly re-invigorated my spirits. I am no longer surrounded by the sole focus on profit.

NOTE: With ‘beyond measure’ we mean two things: that creative, problem-solving work cannot be measured ‘objectively’ and that the increasing immaterial value that it brings to products and services are equally difficult to measure. Furthermore, lots of the new cooperatively produced services are used by millions ‘for free’ and cannot be translated into monetary exchange value. They are already ‘beyond money.’ Hence, it is difficult for the ‘new economy’ and financial capital to value these services in monetary terms. It was one of the key causes of the wild value fluctuations of the new economy and its collapse and of the enduring difficulty to harness open source production in a pure economically-biased way.

Email: michel@noosphere.cc
Personal Website: http://www.exponentialservices.com/michel.bauwens/