Cooperation Commons: Interdisciplinary study of cooperation and collective action.
Coase's Penguin, or, Linux and The Nature of the Firm
Summary of: Coase's Penguin, or, Linux and The Nature of the Firm
Commons based peer production (e.g., free software) has emerged in the pervasively networked digital information economy as a third method of production which for some projects, has productivity gains, in the form of information and allocation gains, over market and firm-based production.
The traditional framework of the organization of economic production includes two modes of production: individuals order their productive activities either under the direction of managers at firms, or as individuals in markets following price signals. Free Software is one example of a broader social-economic phenomenon that Benkler calls 'commons-based peer production', a new, third mode of production in digitally networked environments. In order to explain the emergence of this third mode of production Benkler augments the traditional production framework. Because of the highly variable nature of human expertise, and given a pervasively networked information economy, commons-based peer production has advantages over the two traditional forms of organization. The paper concludes with a discussion of the problems of motivation, loss of motivation, and integration in peer production enterprises. Benkler concludes that (1) "Given a sufficiently large number of contributions, direct monetary incentives necessary to bring about contributions are trivial." and (2) "Peer production is limited not by the total cost or complexity of a project, but by its modularity, granularity, and the cost of integration."
The paper concludes with a discussion of the problems of collective action and how they are solved in the absence of property and the presence of high transaction costs of monetary compensation. Relevant factors include the fact that the resource being produced (information) is non-rival, that problems are divisible into a fine level of granularity, the ability to provide integration (quality control and handling of contributions) in a socially acceptable manner, that the pervasively networked information economy provides access to a large number of potential contributors, and the willingness of contributors to accept non-monetary rewards.
Benkler posits that understanding peer production in the same framework as the mainstream economic theory of organizations could explain the emergence of commons-based peer production. The mainstream economic theory of organizations says that individuals organize into firms whenever the cost of achieving an outcome is greater using a price system. Peer production emerge whenever the cost of peer-based production is lower than either market-based or firm-based production. Property rights emerge whenever the value of a resource is such that its utilization through a property-based appropriation offsets the cost of implementing and enforcing the property rights regime. Commons emerge when the cost of implementing a property regime is higher than the opportunity cost of the property. Market and firm based production can be divided into property based production and commons-based production. Peer-based production fits well into the framework with plenty of examples of both property based production (e.g., Xerox's Eureka) and commons-based peer production (e.g., free software, academic science, Wikipedia).
The emergence of peer production is tied to a pervasively networked information economy. Commons-based peer production has systematic advantages over market and firm based production when (1) the object of production is information or culture, and (2) the physical capital necessary for production is widely distributed. Both of the advantages of peer production are a function of the variability of human capital. First, commons-based peer production has an advantage of having a lowest cost of determining who is the best person for a given task (Benkler calls this 'information opportunity cost'). Second, it has an advantage of allocation efficiency where large groups of potential contributors interact with large groups of resources in the search for new tasks. That is, the practice of firms -- and to a lesser extent markets -- of securing access to limited sets of contributors and resources through contracts and property entails a systematic loss of productivity.
Benkler addresses the problems of motivation, loss of motivation, and integration in peer production enterprises. Benkler concludes the following:
Two kinds of actions represent threats to motivation (1) (the most important) unilateral appropriation by an individual or group of the project and (2) some behavior affecting the intrinsic value of participation for contributors (e.g., failure to integrate a contribution). Free-riding is a common demotivating action in commons. Since information is non-rival, free-riding is a non-issue so long as the pool of contributors is sufficiently large and the act of free-riding does not undermine production. In this sense, 'Absence of exclusion' is the organizing feature of commons-based peer production. Finally, integration requires (1) a quality control or integrity assurance mechanism, and (2) a method for combining individual contributions into the whole.
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