Friday, June 24, 2022

Participatory Capitalism: The Ownership Economy And The Macro Trend Of Micro Organizations

Next time someone frets about large corporations inevitably growing larger and power and ownership more concentrated, don’t necessarily accept it as truism. Others would say that the corporation is dying, micro-organizations are multiplying and we’ve never seen more innovation around distribution of ownership and governance as today.

In 1973, borrowing from the philosophy of Buddhist Economics, German economist EF Schumacher wrote what would become regarded as one of the 20th Century’s most influential books, Small is Beautiful – A Study of Economics as if People Matted, Aspiring for progress that would make everyone better off, holistically not only economically, he pushed for redistribution of ownership. He called for technologists to lead a revolution: to reverse the destruction trends of ever-growing companies resulting in ever-growing concentration of power by developing “methods and equipment which are cheap enough so that they are accessible to virtually everyone, suitable for small- scale application and compatible with man’s need for creativity.” Five decades later, the technology Schumacher called for–distributed trust systems powered by blockchain, creator economy applications and micro-enterprise tools lowering the barriers to entrepreneurship–is here and its availability is fundamentally changing our capitalist system: small is powerful and a study of where our economy is going shows people actually matter. Ownership is becoming the new membership, the community governs, and micro organizations are a macro trend.

The concept of an ownership economy–a system where power and economic rewards are distributed between participants as opposed to concentrated at the top–isn’t new. Put into practice, companies such as supermarket chain Publix, the world’s largest employee-owned business with around $45B in annual sales, have proven that community ownership can be big business. Philosophically, the idea of ​​a more participatory capitalist system has been upheld as an answer to economic disparity as well as the modern world’s quest for meaning and a more fulfilling existence. The question remains, if the idea of ​​distributed ownership has been celebrated for centuries, why hasn’t it become the dominant economic model and why does that change with blockchain and micro-enterprise tools?

Micro-enterprise technology, what Schumacher envisioned as “People’s technology,” provides people access to the business tools and infrastructure previously reserved for the enterprise, lowering the barriers to start a business. From 2000 to 2017, there was a +722% growth in sole proprietors in the US. Today, 28% of workers have some sort of self-employment and for about half of them self-employment is their main income. Whether you’re a social media content creator or an AI researcher, micro enterprise tools create collaborative efficiencies aggregating demand for the tools you need to do your best work and make them accessible to you as an individual.

Micro-enterprise technology was an enabler to what we call the creator economy; an independent creative class empowered to make a living from their passions. While the workforce of the creative industries are at the forefront of adopting micro enterprise tools and becoming owners of their time and work, the shift is happening across industries providing an option to work more creatively in every sector of the economy. The same categories of offerings powering the creator economy are powering micro entrepreneurs at large: the platforms for talent to connect directly with those who demand their services, the tools necessary to carry out the work independently, and new monetization enablers. Micro enterprises are abstracting away complexities from value chains and bringing us away from “gigantism” and back to human scale: humans need human relationships, and from those stems a more ethical attitude as we grow closer to each other and closer to ourselves.

Marrying the creator economy, micro-enterprise tools and decentralization we arrive at today’s emerging ownership economy; an economy built on inter-dependence amongst a decentralized community where users have ownership in the products that they use and are rewarded for the value they create. The community is at the core of the ownership economy, just as it is in the creator economy, but now the membership model has been replaced with ownership and the idea of ​​”true fans” with valued contributors. To use a tired but illustrative example, look under the hood of blockchain powered earn-to-play gaming platform Axie Infinity. Here users breed digital pets called Axies that, unlike content on previous generation entertainment platforms, are fully owned by the creator in the form of non-fungible tokens (NFTs). These assets can be traded on the Axie marketplace and ultimately exchanged for cryptocurrencies or cashed out in fiat. By gaming, players also earn tokens with governance rights; a say in the future of the platform and how a portion of Axie Infinity’s revenue is governed. In other words, users have ownership in the content they create as well as the success of the platform itself, and are rewarded for their time and contributions with currency that has value outside of the game. To date, $3.6B has been traded on the Axie marketplace with the most expensive Axie putting $820,000 in its user’s owner’s pocket.

In the ownership economy, accountability and collaboration are building blocks of the organizational structure as opposed to cliches plastered over lofty value statements–and to match the normative organizational structure is no longer necessarily the corporation. In Decentralized Autonomous Organizations (DAOs), to put it simply, governance takes the form of an encoded transparent computer program distributed between a large member pool, as opposed to an opaque decision making process made around a small table. In a matter of years, these characteristics have popularized DAOs from a somewhat theoretical concept to an in-vogue way to organize. Only in Q4 2021, total value locked of DAO treasuries [TVL; overall value of assets deposited] grew 90% to $15.2B.

Over the last decade, the barriers to start a company diminished. Over the next decade, ever-more people will become their own bosses without even forming a corporation, favoring alternative forms to organize while benefiting from new bases on which ownership will be distributed.

Buzz word or Bliss world?

Still wondering whether this whole creator-ownership-microbusiness-thing is just buzzwords to make Venture Capitalists, Cryptobros and Tiktok influencers rich? While some digital billionaires will dawn in the process, it’s more importantly about the billions of people who gain access to the tools to create, shape and benefit from future progress in a meaningful way. It’s about providing new means to distribute power away from the monopolitically large and to empower the many with a more participatory world economy and society. To quote Gandhi, “the poor of the world can not be helped by mass production, only by production by the masses.”

Are all micro enterprise and creator economy applications useful? Both yes and no, as they grant more people the right to define for themselves what is useful and meaningful in work and life to them. Do decentralized projects actually equal distribution of power? Far from always, but the underlying technology provides the infrastructure to rethink our system and who controls it. Will the community truly have a say in how the organizations they collectively own are governed? Theoretically the mechanics are here, but the platforms to make large-scale collective governance practical and transparent are only now being built. And with new tools, new standards will be placed on the old ways of distributing ownership and power as well—with everything from employee stock options to the governance rights of public equities about to get an upgrade.

To allow the technology to reach its full potential—a world where success doesn’t corrupt, micro-enterprise tools geared at the developing world puts millions in charge of their own destiny, tokenization allows the masses to partake in the upside of previously inaccessible asset classes, incentives between for-profit organizations and their communities are aligned, and the public steers public companies—we shouldn’t judge it by its early applications. What we should do is entice a more diverse set of pioneers to shape those applications, not leaving all the fun (and the weight of responsibility) to the gamers and Cryptobros. The picks and shovels are here, and while they can be used to build another NFT marketplace they can also be leveraged to build a more human, inclusive and accountable society.

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Nation World News Desk
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