Economic Networks

A series of posts about those things. Oldest posts first.

Introduction to Economic Networks

  • “There is growing consensus that capitalism is unsustainable and that something simply must change. It is not hard to point to the various reasons for this critique; from growing fears about the status quo’s inability to tackle climate change, to rising inequality on a global level, to the continual failure to achieve acceptable living standards in the Global South, and to the pressure of an insurmountable wealth gap between the elites and the working classes in advanced economies.
  • “However, actually achieving a change to the status quo requires dismantling entrenched interests and taking on a system apt at perpetuating itself. Since regulatory and policy approaches have largely failed to achieve this change, we contend that it is time to identify, research, and implement alternative methods and strategies that may better drive systemic change.” *Social Entrepreneurship & Management Masters Thesis, Danny Nielsen and Olivia Grazzini

Several of the strategies in experiments around the world involve economic networks of one kind or another, for example:

And here's another economic network planning to form in the US pacific northwest. Basyn creates and operated biodigestors that transform food wastes into fertilizer. SeedShare saves and shares seeds. Farmers grow food using the fertilizer and send their own wastes back to Basyn. Shiro distributes and processes food, and sends their food wastes back to Basyn, too. Basyn, SeedShare, and Shiro are networks themselves, and then internetworked by Basyn.

network of networks

The stated logic of capitalism is the “free market”, with it's fabled “invisible hand”, and it's less-fabled “invisible foot” which kicks the “externalities” under the table.

Economic networks shelter themselves from the “free market” except at their edges. Internally, their relations are usually cooperative, not adversarial.

That is also true of many commercial supply chains: they rely on negotiated long-term relationships. They do not go out on the free market to get their components, relying on “price signals”. For lots of details about how that works, read the book “The People's Republic of Walmart”, or this review: http://inthesetimes.com/article/21773/socialism-leigh-phillips-michal-rozworski-peoples-republic-of-walmart

Non-capitalist rules, or, cooperators rule

Internally to an economic network, the participants can set up any rules of engagement that they can agree on.

So, for example, the multiple stakeholders of the Fifth Season cooperative include regional farmers, institutions like hospitals and schools that serve food, and the workers who distribute the food and administer the network. During the formation of the cooperative, all of the initial stakeholders met in a big room, several times, and discussed what prices would be fair for both the farmers and the institutions, and what would be fair wages for the workers. Took a few rounds of negotiation, but they have now been up and running successfully for more than 10 years.

Or Sensorica, where they distribute income to whoever contributed in any way to the project that brought in the income, using a democratically-decided “value equation”. More details here: https://speakerdeck.com/mikorizal/10-nrp-value-equation-concepts-and-tutorial

The DiSCOs also want to use democratic value equations for what they call “contributive accounting”. More details here: https://disco.coop/governance-model/#Contribution_Tracking.

The history of such networks is that if any of the participants feel like they are being treated unfairly, they will drop out, and if enough of them drop out, the network will split and/or collapse. Which has happened to more than one network. See also https://www.academia.edu/10252910/The_uneasy_transition_from_supply_chains_to_ecosystems_The_value-creation_value-capture_dilemma

All of that cooperative logic is the opposite of the logic of capitalism, where each economic agent is on their own, competing with all the other players in a big winner-take-most game.

Economic network operating systems

We ( http://mikorizal.org/ ), along with several other contributors, have been working on infrastructure for economic networks, including a prototype system we developed in 2012 in collaboration with Sensorica that we called NRP for Network Resource Planning, which you can read about here: https://speakerdeck.com/mikorizal/1-nrp-overview

That software has been forked several times, including for a high school fablab network in Milwaukee Wisconsin, called https://learndeep.org/ (yet another economic network).

From that experience and many other inputs, the https://valueflo.ws/ vocabulary and protocols were developed to allow distributed economic networks of all kinds to coordinate with each other.

Value Flows has given rise to several new software projects using distributed technologies. 3.5 of them are described here: http://mikorizal.org/futures.html

Bootstrapping

This article https://docs.google.com/document/d/1NwEcKf-AlD3WlvHFNCmGmDKp9NerPeAaHeTHTrdF628/edit?usp=sharing surveys a few proposals for better economic systems, and argues that a new economic system in North America or Europe will probably not result from a revolution as in the Soviet Union, China, or Cuba. We don't have the forces at this stage, for any definition of we, and even if we did, do we really know how to create a better system at that scale, as of now or the near future?

So maybe a better way to go is to bootstrap new-economy experiments as economic networks, work out the relationships and logic until some good models emerge, and then internetwork them into more of a full economic system. Remains to be seen if these experimental networks need to be local, based on the ground, or if they can just be digital, on the internet. Both are happening, but can a purely digital network, even if it facilitates some transfers of physical goods, provide for enough of a whole economy to provide any useful lessons?

Kate Raworth of Doughnut Economics has started an Action Lab to put the ideas into practice in cities.

Here's the Doughnut:

economic doughnut

It includes the ecosystem limits as well as the provisioning of human needs into the same model, and so is a good starting place for bootstrapping a different economic system.

The Action Lab aims to bootstrap the Doughnut ideas in cities.

The Doughnut model “is silent on the possible pathways for getting there, and so the doughnut acts as a convening space for debating alternative pathways forward.”

Regardless, the cities who try to implement the Doughnut will need to create one or more economic networks in the middle.

Why do I think they are important enough to write a series of blog posts about?

I think they are an opening, an aperture, an entry point, to a better economic system.

People can experiment with different economic relationships without needing to take on the whole global capitalist system all at once.

People can figure out which economic relationships work and which don't. Which might be better than either a sudden revolution or collapse of civilization and then figuring out what to do. Or taking some blueprint that somebody wrote up without anybody ever trying it. Or looking at partly failed attempts from the past that nobody really wants to repeat.

But there's a catch...

...of course. Your economic network with better rules will meet the surrounding capitalist system on every edge. You will not be able to get all of your needs met within the network and so will need to buy them in capitalist markets. So you will still need money, the coin o' the realm.

And you may need to pay taxes, and be hemmed in by laws that assume capitalist relationships.

And all of the people will have been trained in capitalist ideology, that is, me first.

I'll write about still needing money in another post. But next, economic networks in chocolate...

Mike Hales keeps trying to get me to check out Robin Murray.

So here he is, talking about economic networks of chocolate farmers, processors, distributors, etc..

This is in the context of Fair Trade, which describes itself as “a global movement made up of a diverse network of producers, companies, consumers, advocates, and organizations putting people and planet first.”

In other words, not like capitalism...

Unless network members can meet all their need in-network: * some members, and/or the network collectively, will need to make money in the capitalist economy. – some members could get jobs – the network collectively could sell goods and/or services – the network could get grants – etc.

Capitalist ideology and relations will invade the network, for example: * network members will compete with each other when they should cooperate [^1]; * factions will form to compete more successfully; * all of this competition will be amplified and multiplied if the network uses the coin o' the realm internally; * network members will call upon outside capitalist allies to compete and take over more network resources; * in order to earn money, especially by getting grants, the network may need to compete with other cooperative networks rather than organizing a larger cooperative economy.

We have seen all of these diseases happen in cooperative economic networks. * One member of one network organized a faction promising venture capital which split the network but the venture capital never came. * The leaders of another network applied for venture capital but the venture capitalists told them to change the cooperative rules, which they did, whereupon the network collapsed from loss of members, and the venture capital never came. * One network collapsed because one of the leaders favored his own business interests too much for the other members, many of whom left, and soon there were none. * Another network failed to get started because of disputes over money.

But we also see networks that continue for years, and some of the networks that split, continued after reorganizing.

SO it's hard but not hopeless.

What is the solution to all of those problems? I think, but cannot yet prove, that building bigger networks that can provision more of their members' needs would help a lot. We'll see, some people are working on that...

[^1]: Yeah, ok, not all competition is bad. Some competition is fun. I don't know if I can strictly define the diffs...

Open Science Hardware forum post

Medium articles: * https://medium.com/@journalopenhw/open-hardware-distribution-documentation-working-group-intro-8b340748e59 * https://medium.com/@journalopenhw/open-hardware-distribution-documentation-working-group-values-based-standards-for-manufacturing-4e90da89070e

The group has a short term goal of a proof of concept around OpenFlexure, but a longer-term vision around enabling sustainable distributed manufacturing (and all that it entails, keep reading) in OScH. We aim to open a pathway for more OScH projects to have greater impact and use in the real world. Some of the questions we’re interested in include, how do we ensure the creators/developers get an equitable distribution of the value in a distributed rather than centralized production system? What are the incentives and strategies for the manufacturing community to drive quality and innovation in the process? How can we ensure the products meet quality standards so that scientists and others can trust the data that they produce?

Differences from typical capitalist practices include: * cooperation rather than competition; * open, shared, common knowledge instead of jealously-guarded “intellectual property”; * sustainable production instead of getting away with as much plunder as possible; * “equitable distribution of value” vs exploitation for profit.

This is a guest post from Matt Noyes, a social movement educator and organizer based in Colorado Springs, Colorado who writes on horizontal education, union democracy and reform, workers cooperatives, and solidarity economy. In the fediverse, he is @Matt_Noyes@social.coop

1. What is OFN?

  • The slogan now on their website:

    • “Food, unincorporated. Sometimes the best way to fix the system is to start a new one.”
  • My favorite and the one I will use to introduce OFN today:

    • – “Food sovereignty that comes with software”
  • OFN defines itself as a social enterprise that develops and manages a decentralized, open source, online platform on which:

    • farmers and producers worldwide can sell produce and products through local supply networks;
    • food hubs, buyers clubs, and cooperatives can manage collaborative purchasing and distribution;
    • consumers can find and buy local food, organic, regenerative, etc. individually and/or collaboratively.

2. What does it look like?

  • If you go to https://openfoodnetwork.net/ you’ll see this. (openfoodnetwork.org is the global site)
  • A typical farm in our region, New Roots Farm in Cañon City, looks like this: https://openfoodnetwork.net/new-roots/shop#/home
  • There are differences, but basically it looks like a lot of other online local food distribution platforms, e.g. LocalLine.ca, and, as an e-commerce platform, it functions like them.

3. What makes OFN different?

  • Its mission: “food sovereignty” and “starting a new system”

    • What is food sovereignty?

      • Think about the food system, borrowing from the materials economy diagram used by the Story of Stuff project
      • Four main steps or sites:

        • production (clearing, cultivation, irrigation, harvesting, etc.)
        • distribution (sorting, packing, shipping, storage, selling, etc.)
        • consumption (preparing, cooking, eating, storing, sharing, etc.)
        • disposal/recycling (gathering, collecting, sorting, composting, producing mulch, tea, etc.)
    • “Sovereignty” is an interesting term, makes you think of Kings/Queens, dictators, or Gods, or humans being granted dominion over all things… but there are other concepts:

      • “power over” vs. “power with”
      • individual and collective
    • we can say sovereignty is the power, authority, and capacity to:

      • know
      • choose
      • decide
      • control
      • govern
      • violate the rules
      • CHANGE the rules
    • So food sovereignty is ultimately the power to transform the food system

      • at all points in the cycle (not just deciding which product to buy)
      • can involve various forms of ownership: private, collective, commoning...
    • The opposite of sovereignty? servitude, subordination

      • in our context this means subordination to capital (usually in the form of large corporations, investment funds, banks, land developers, etc.)
      • collective, democratic ownership – cooperatives, land trusts, commons – is an important tool for blocking capital sovereignty and protecting our food sovereignty
    • Most important

      • sovereignty (like subordination) is a process, something we do together, implying organization and action
    • Finally, food sovereignty extends into logistics, too.

      • Data
      • Communications
      • Protocols
  • Its structure: OFN’s focus is on helping people (farmers, truckers, makers, consumers, composters, etc.) collaborate to build food sovereignty networks. How? In part, through shared use of a software platform that we can use to organize in various ways.

    • How are we organized? Colorado Food Network – Five Patterns of Community Food Enterprise (based on New Economic Model for African Farming Networks)
      • direct producer-consumer exchange (New Roots Farm)
      • farmer hub or co-op to consumer via CSA or other subscription (TapRoot Cooperative, Excelsior Food Hub)
      • producer cooperative direct to consumer (Colorado Farm and Art Market)
      • buyer’s club – consumer to producers (Hunt or Gather)
      • multi-stakeholder producer & consumer food cooperative (just an idea at this point in our local area)
    • these patterns already exist and can be networked on OFN in the form of a local food sovereignty group or network that is part of a larger network of such groups
  • Its business model(s): OFN is a type of platform cooperative. (See Internet of Ownership ioo.coop)

    • In this case a decentralized network of collectives, cooperatives, and non-profits with a shared admin/developer staff
    • Funded through donations
  • **Its software model: **Free Libre Open Source (FLOSS) – more or less like Linux OS

    • beer and freedom
    • anyone can access, copy, contribute to, fork... the code
    • why? To make the software a shared resource on which to build newer and better platforms
    • akin to a commons in agriculture, part of a shared set of resources

This is an introduction to a series of posts on pictures of economic networks

Pictures as in visualizations, diagrams, models, etc.

I'll present several variations on that theme, each of which has different perspectives, pluses, and probably minuses.

I'll use the Resources, Events, and Agents (REA) ontology as a unifying or core model behind all of them.

Here's a set of references telling you more than you want to know about REA from the Value Flows economic network vocabulary, which is based on REA.

Here's a simplified diagram of the layers of REA: REA diagram

(Note: the names are from the ValueFlows vocabulary, which are slightly different from the original REA: Specifications are called Types in REA, Processes are called Conversions, and Recipes and Intents do not exist in REA (but should?))

Agents are Economic Agents, who are authorized to perform Economic Events affecting Economic Resources.

Agents can be individual persons or organizations.

An Economic Event can take actions like create, change, consume, use, or destroy Economic Resources, or transfer them from one Agent to another, or transport them from one place to another. ValueFlows adds more event actions, in their description of resource flows.

Economic Resources would typically be useful goods and services, but could also be money, energy, work, or almost anything else that some Economic Agents can agree should be accounted for in their economic networks.

I'll refer back to those concepts when describing different ways to visualize economic networks.

If you've followed the previous blog posts, you've already seen three ways, the network of networks diagram in the first post, Jane Raworth's Doughnut diagram, and Matt Noyes' food network model.

Several more to come...and I'll summarize at the end of the series.

This is the first example in a series of techniques for depicting economic networks, introduced in the previous post about Resources, Events and Agents, which is the vocabulary I will use for describing the diagrams.

The ValueFlows community (which is itself a cooperative economic network of cooperative economic networks) has wanted a visual language for describing flows in economic networks for a couple of years.

We settled on the basics of a style one year ago, inspired by string or wiring diagrams as used in the Applied Category Theory community (the Catsters, who are also a cooperative economic network). Here's an example, from the paper Seven Sketches in Compositionality: An Invitation to Applied Category Theory by Brendan Fong and David I. Spivak:

Lemon Meringue Pie

Two variations below will demonstrate some capabilities of that style.

That style is what we have been using in two related projects, https://valueflo.ws/ and https://github.com/holo-rea (each of which also constitute cooperative economic networks).

The diagrams show strings or wires or arrows between nodes, which can be individual or group Agents or Processes or Transfers or any mixture thereof, at any level of abstraction or aggregation that suits the purpose of the diagram.

For example, you could use individual Agents, or group Agents, or types of Agents, or Agents performing some function like farmers. You could use small or large-grained Processes.

In this diagram, the Agents (Basyn,SeedShare, and Shiro) are whole networks: network of networks

The arrows are directed, from one node to another node, and Economic Resources ride on them. You could depict the Resources as labels on the arrows or separate named shapes.

The Resources are usually abstract rather than tangible: Resource Specifications or classifications or taxonomy items at any level of specificity. For example, an arrow could show Fruit, or Apples, or Granny Smith Apples, or Organic Apples from Eve's Orchard (which is a real place).

The Resources on the arrows could be quantified, and if so, you could vary the width of the arrow according to the quantity of the Resources on it, creating something like a Sankey diagram.

However, you could also create an animated diagram with tangible identifiable resources traveling on the arrows in near-realtime with the nodes geolocated on an Open Street Map.

The shapes don't matter, only that the reader be able to distinguish nodes from arrows and resources. The style as we use it is very flexible, but it's good to be consistent within a family of diagrams or a family of projects.

The diagram style comes from the Catsters, where they use them with mathematical rigor and consider them the logical equivalent of code or proofs. We will not try to use them so rigorously...yet. None of us understands enough Category Theory to do that, and we have not yet attracted any experienced Catsters to help us. But becoming more mathematically rigorous with our diagrams would be a good research project for somebody, and would probably enable some new and interesting capabilities.

Some capabilities emerge easily:

If a node has a resource arrow as an input but the arrow has no source, another node could be connected which can provide that resource as an output. Same with node with a resource arrow as an output but no destination, another node could be connected that wants that resource as an input. Likewise with resource arrows with quantities: if the source or destination quantity is less than the resource arrow quantity, other nodes could be connected to take up the slack.

For example all of the arrows in this diagram come from or go to other nodes that are not shown in that box: pie with waste

You can also nest diagrams inside a box on a higher-level diagram fractally and drill down and climb back up. Like, here's the pie preparation diagram nested inside another diagram where the pie gets baked: bake the pie

So as you might imagine in the network-of-networks diagram above, the details of each network can be depicted in other related diagrams. Sometimes more artistically, but still a resource flow diagram of part of the Basyn network: vashon

Lots more examples at https://valueflo.ws/examples/ex-complex.html

Our diagrams are already rigorous enough to be able to be generated programmatically from data. Here are a couple of not-very-good proofs of concept that could be improved: * http://valueflows.pythonanywhere.com/vocab/egg2worm-flow/ (this diagram handles the eggshell waste from the pie-with-waste diagram) * http://locecon.org/clusters/network/11/

More rigor might allow generating data from the diagram to make it executable by a program. I think we want to tread lightly into executable diagrams for operational use. Keep the humans in the loop more there. But they might be useful for simulations.

The name of the diagram style varies from one Catster publication to another. They mostly say String Diagram, but sometimes Wiring Diagram. Some of them consider those names to be synonomyms, some them assign different meanings to each name. I asked them which name we should use and the rough consensus seemed to be, if we are just using the diagrms to communicate with humans, it doesn't matter. If we become more rigorous and use the diagrams as code, it might matter.

Here is an overview and a bunch of references about string diagrams from a category theory viewpoint: https://ncatlab.org/nlab/show/string+diagram

...separating the commons from capitalism but including a bridge.

This is the second example in a series of techniques for depicting economic networks, very different from the first one.

Simple and schematic, contrasting the Commons from Alienated Production: aliens vs commons

“Alienated production” in that diagram means situations where the value generators (the people who do the work) do not control their own conditions of production, that is, they are working for somebody else, who controls their working actions and conditions and takes all the products they created and all the profits from selling them.

The diagram comes from Ron Eglash, who explains it in detail in his own blog, about Generative Justice.

Eglash contrasts generative justice from distributive justice, where money goes to the government and then is distributed to the populace to somewhat make up for injustices in the economic system. The principle of generative justice is “the bottom-up circulation of unalienated value”, controlled by the communities where the value was created. Done well, the injustices do not happen in the first place, to be (partly) compensated later.

Here are a couple of Eglash's examples, related to a couple of the networks described in previous posts.

The first example is related to the post about Distributed manufacturing of open hardware.

Eglash introduces this example: This particular chart is for the case of Arduino, an open-source, microprocessor-equipped prototyping platform that has inspired a wide range of “maker” or “DIY” innovations created in an artisanal, unalienated mode of production. In contrast to the idea of patents or copyright, open source generally allows anyone with the right to distribute, modify and make use of the intellectual property. In the case of Arduino it means I can download a blueprint of the circuit, make whatever changes I like, manufacture my version and sell it. And the code these circuits run is also open source, and thus similarly shared by peers, both lay and professional. Code is shared through a “public commons,” hence the phrase “commons-based peer production”

arduino-diagram

The thousands of “makers” in the Arduino ecosystem (in the lower right quadrant) create many gadgets for themselves, sometimes useful, sometimes just for fun. But they also do a lot of volunteer work for humanitarian purposes, such as innovations for disability, citizen science for pollution detection, communications for disaster relief, low-cost health electronics for developing nations, and the “MakerNurse” program which supplies nurses in developing nations with online resources and hardware tools (such as “MEDIKit”, a low-cost Arduino based platform for DIY medical gadgets) for a growing collection of nurse-made innovations.

This is not exactly a resource flow diagram, as in the first technique. Although resources are flowing on the arrows, they are not specified other than alienated value flowing on the single-line arrows vs commons value flowing on the double-line arrows.

The bridge, in this case, is the money coming from the sale of products created in the commons, sold in the capitalist market, and then the money funds more commons-based activities. This is necessary now because of the “catch” in cooperative economic networks, where they meet the capitalist economy on their edges and need money to provide resources that they cannot produce inside the network.

The second example is related to the post about Economic networks with chocolate:

Kuapa Kokoo

  • Upper left: alienated value in Warner Bros franchise
  • Lower right: peer production in the Harry Potter Alliance
  • Upper right: hybrid production in the Kuapa Kokoo cooperative

Eglash explains, When it comes to low-income African farmers becoming owners of a multimillion dollar chocolate empire, it’s hard to argue against generative justice. But most cases are more messy and incomplete. In particular, unpaid online peer production – forms such as fan fiction and community cookbooks—are often derided as too trivial to matter. One clear counter-example is the Harry Potter Alliance, an online network of fan fiction enthusiasts who blend the usual fan activities with humanitarian causes. In 2010 they began to petition Warner Bros to use fair trade chocolate in the Potter World theme parks and other franchise venues After 4 years of activism they succeeded in forcing the change. [The diagram above shows] the flows of value in this case. There are 3 cycles. At the upper left, the Warner Bros carries out the usual mass production techniques of any large corporation. At the lower right, the peer to peer production of the Harry Potter Alliance is more or less like any other fan club, albeit one with a strong humanitarian outlook. As detractors...might point out, no matter how effective its outcomes, it’s hard to see how unpaid labor can become self-sustaining; it will always be “parasitic” on the ordinary economy. But it is the presence of the upper right cycle [explained in the video in that related post] that makes this an extraordinary system. This kind of hybrid production which participates in both generative and commercial cycles holds powerful potential for change.

The hybrid cycle in that system is the same (in a generative sense) as the upper-right hybrid cycle in the Arduino system, where people work in a cooperative, not alienated environment, to create something they can make money from in the market economy and bring the money back into the commons environment.

Those hybrid bridges between the commons and the capitalist market are how most commons-oriented projects survive these days. Will take a commons community that can organize a whole community economic system, that can provision all the important needs for their members and their local environment, to escape from that situation.