(chart is explained in more detail in this earlier Gift/Generosity Economy article) If you read the business press, you will find, just about every day, stories about acquisitions and takeovers of small companies by bigger companies. Some large corporations now brag that their business is taking over small companies. The studies by experts in corporate finance have repeatedly shown that in 70-90% of cases these transactions “destroy value” — in other words, the value of the combined entity is less than the value of the two combining entities before the combination. Yet the share value of the combined entity is usually greater than that of the two combining entities. What’s going on here? The corporations would have you believe that the combination promises “economies of scale” — that redundant positions can be eliminated, duplicate processes eliminated, volume discounts obtained from suppliers, and efficiencies obtained by combining operations. Anyone who has ever been through a combination can tell you that this almost never occurs. In fact, costs rise after the combination because of diseconomies of scale — the larger the organization, the greater the hierarchy, the more the bureaucracy, and the more infrastructure is needed to keep it all connected. Small is agile. Large is clumsy. There are no efficiencies of scale. So why do these transactions still occur? In a word, power. Consolidation isn’t about the consolidation of resources, it’s about the consolidation of power. Size gives you four types of power:
This is a self-perpetuating vicious cycle. We aren’t going to solve it through political means, or by trying to find ethical companies to buy from (there are few left, and those that are left cannot compete with slave labour wages of the oligopolies, so most consumers can’t afford, on their slave labour wages, to buy ethical, quality, or healthy products). The only solution lies in walking away from the oligopoly economy and creating our own Peer Production / Generosity Economy. This alternative economy is based on maximizing well-being, not corporate profit. It is based on trust, not power. It is based on sharing and equalization, not on greed. To participate in this alternative economy, we each have to invest something instead of money: our time. The Generosity Economy is based on knowledge — knowledge of who can and will do what, and who needs what. It is based on the liberating principle that instead of working ‘for a living’ doing something we hate so we can afford to buy what we need, we instead produce what we’re good at producing (and like producing), put it on the table for others to take, and take back (from what others have produced) what we need. It’s that simple. It’s entirely economically viable, but it will require a major investment of time to set up and maintain the self-managed knowledge bases of what we have to offer, what we need, and who is available and interested in co-producing with us other stuff that’s needed. We are already Peer Producing a lot of things: Open Source software, information and entertainment on the Internet (Creative Commons), scientific exchange, and social collaborations (e.g. community barn-raisings and community broadcasters, and volunteer work, which gives the ‘donor’ as much as the ‘recipient’). Many non-Western cultures give without expectation of payment, because they know that an investment in social relationships always ultimately pays big dividends. The Net Neutrality champions are working hard to prevent the oligopolies from increasing the price paid for Internet bandwidth to producers, including Peer Producers. The oligopolies want to price uploading out of the reach of the rest of us, to preserve their oligopoly on production. They want us only to consume, to download, and of course they want us to be able to consume only what they produce, at their fixed price. The whole idea of Peer Production is to let us all become producers, let us all collaborate with others, ad hoc, where multiple skills, talents and resources are needed to produce something that’s needed, and, because this production is shared, generously, to let us obtain what we need from others. In the case of needs that are material (physical goods and services that must be provided hands on), these Peer Production networks should generally be local, community-based. Sending goods and people long distances when more local sources are available is wasteful and dysfunctional (and remember, there are no economies of scale). In the case of needs that are not material (those that can be provided for virtually, or as bits instead of atoms) the Peer Production networks can be global, provided anytime from anywhere. Individually, and separately, we can’t compete with the power of oligopolies. But together, working collaboratively as peers, we can have far more power over our own lives, our economy, our society, and the well-being of all-life-on-Earth, than oligopolies could ever dream of having. A century ago, to fight the corporatist oligopolies, we organized in labour unions. Peer Production and the Generosity Economy is the 21stcentury ‘labour union’, united this time not to negotiate with producers, but to render them obsolete, to replace them. Category: Alternative Gift Economies
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