“And what are economies of scope? As a teaser, for now, this short definition: “An economy of scope exists between the production of two goods when two goods which share a common cost are produced together such that the common cost is reduced.” In other words, something that brings down the common cost of a factor of production, not by producing more of a unit but through shared infrastructure costs.
Indeed, economies of scale work well in periods of energy ‘ascent’, when more and more energy is coming online, but they work less and less in periods of energy ‘descent’ when the overall supply of energy and resources are diminishing. What you need then are economies of scope, when you can ‘scale up from one’, as with today’s emerging “making on demand” infrastructure.
Economies of scope is exactly what peer production (in its different iterations of open knowledge, free culture, free software, open and shared designs, open hardware and distributed manufacturing, etc.) is all about.
Let’s recap what is wrong with the current global system, which is entirely predicated on economies of scale, and actually in many instances makes economies of scope illegal.
- Our current system is based on the belief of infinite growth and the endless availability of resources, despite the fact that we live on a finite planet; let’s call this feature, runaway ‘pseudo-abundance’.
- The current system believes that innovations should be privatized and only available by permission or for a hefty price (the IP regime), making sharing of knowledge and culture a crime; let’s call this feature, enforced ‘artificial scarcity’.
Peer production methodologies are based on the exact opposite economic and social DNA. Peer production communities believe that knowledge is a commons for all to share, and hence, no innovation can be withheld from the human population as a whole.
In fact, withholding a life-saving or world-saving innovation is seen as unethical, and this represents a true value inversion. And peer production designs for distribution and inclusion, i.e. small scale, even personal fabrication. Planned obsolescence, which is a feature and not a bug of the current system, is totally alien to the logic of peer production. In other words, sustainability is a feature of open design communities, not a bug.
So, what are the economies of scope of the new p2p age? They come in two flavors:
- The mutualizing of knowledge and immaterial resources
- The mutualizing of material productive resources
The first principle is easy to understand. If we lack knowledge as individuals (and nobody can know everything) as a community, local or virtual, it is much more likely that someone knows. Hence, the mutualizing of knowledge and ‘crowd-accelerated innovation’, now already a well-known feature of the collaborative economy. But the advantage of scope is created when that knowledge is shared, and thus, it can be used by others. With this social innovation, the common cost of the joint production factor that is knowledge, is dramatically reduced.
Take the example of the paradigmatic Nutrient Dense Project.
This global community of agrarian workers and citizen scientists is interested in experimenting with better nutrients to obtain better quality food. Hence joint research can be carried out to test various nutrients in various soils and climate zones, and they will instantly benefit not just the whole participating community, but potentially, the whole of humankind. Strategies that are based on privatizing intellectual property, cannot obtain such advantages of scope, or at least, not at that level.
The second principle, of mutualizing physical productive resources, is exemplified [in] collaborative consumption. The general idea is the same. Alone, I may lack a certain tool, skill, or service, but seen from the point of view of a community, it is likely someone else has it, and that other person could share, rent or barter it. No need to all possess the same tool if we can access it when we need it. Hence the proliferation of p2p marketplaces.
Let’s take an illustrative example: car-sharing. Car-sharing projects can be mutualized through the intermediary of a private company which owns the cars (fleetsharing, like Zipcar), through p2p marketplaces which link car users to each other (RelayRides and Getaround), or through nonprofits or public entities (Autolib in Paris). But they all achieve economies of scope. According to a study cited by ZipCar, for every rented car, there are 15 fewer owned cars on the road. And carsharing members drive 31% less after they join. So, in 2009 alone, car-sharing diminished global carbon dioxide emissions by nearly half a million tons.
Imagine similar developments in every sector of production.
So, what will the new system look like if economies of scope become the norm and replace economies of scale as the primary driver of the economy and social system? We already mentioned the global open design communities, and we suggest that it will be accompanied by a global network of microfactories, who are producing locally, such as the ones that the open source car companies like Local Motors and Wikispeed are proposing and which are already prefigured by the networks of hackerspaces, Fablabs and co-working spaces.”