Last night I attended a great Sharers of San Francisco meetup organized by Chelsea Rustrum, an author and sharing economy consultant based here in the city. The event featured two presentations, one by Chelsea and another by Felix Weth, founder of the Fairmondo cooperative. The topic of this meetup was value creation and distribution, exploring ways that people can take part in the monetary wealth generated by the platforms they participate in. There were echoes of the recent Platform Cooperativism conference throughout the event. People are definitely interested in an alternative to the “Death Star” platform model that is taking up increasingly large parts of the economy.
At the meetup there was a lot of interest in the coop model of Fairmondo, with some attendees mentioning alternative methods of distributing monetary value back to platform members using automated smart contracts e.g. blockchains. A common desire that was expressed was for members to have a say in the direction of the platform, and for the platform itself to express the values of its members. It was pointed out that the challenges of scaling a cooperative with this model are not unlike the challenges of scaling democracy itself. And if the American experiment has shown us anything, it is that democracy does not scale well. How to reconcile these desires for both democratic participation and scale to compete with the likes of the platform Death Stars?
I believe that there is a third option which breaks the “capital vs democracy” dichotomy of corporate and cooperative platforms, and that is open protocols. An open protocol is a set of rules enforced by code which anyone can implement and integrate into their application. Open protocols can also be forked or upgraded at-will if they no longer serve the interests of their users. Protocols govern the interactions between users without the need for third-party enforcement; protocols are self-enforcing and are usually governed by meritocratic rather than democratic processes i.e. changes are made based on the technical merit of a proposal rather than popular support alone (though technical merit can lead to popular support). The requirement for technical merit when deciding how to change a protocol can make protocols less susceptible to the corruption present in corporate settings and more resilient against the challenges with democracy present in cooperative settings.
The primary benefit of open protocols over both corporations and cooperatives is that an open protocol is owned by no one. There is a creator of the protocol who sets the initial parameters, but users are completely free to adjust the parameters to their own liking after the protocol is released. In the case of protocols which have strong network effects, the process for changing a protocol can be difficult once adoption reaches a certain threshold, since coordination between all necessary parties can be difficult without a central coordinating authority. Open protocols thus tend towards simplicity rather than complexity, making it more likely that more people will use the protocol since there are less details to debate over. Any advanced features that users desire are built on top of the protocol instead. Consider the history of TCP/IP vs OSI; TCP/IP, despite being a technically inferior protocol, won the network effect because it was “good enough” for most people who wanted to join the Internet.
Within the past decade or so, many open protocols have been invented that can be used to assemble platforms that can replace the corporate Death Stars. Here are a few of my favorites, with additional examples that are still in development:
Ripple – protocol for creating mutual credit networks, alternative to lending platforms like Prosper
Is there a protocol that you like which you think can help break the proprietary network effects of the corporate Death Star platforms? Leave a comment below and let me know!