Let's look into community based economics

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While searching why some itches where scratching in my professional life, i came through conversations, towards a possible interesting economical model.

Before we go deeper into the model, i need to share a bit of my story. From when i was 17, for almost 13 years I’m creating or organizing lots of different organisations, communities, projects & even a company: An event bureau that became an art collective, an online cultural magazine, an opensource hardware project for cargo bikes, a temporary community space, a folkloric group, a tool library, a fermentation shop ,… Every time it was / is a passion project but every time it failed to become long term sustainable like i wanted.

While in the beginning it was more my anarchistic tendency to not want to work for the system, earn like the system, later it was more a difficulty to scale up, or to make it “economically viable”, or that it was legally not possible… There is still in me that part that doesn’t want to conform to a classic way of thinking, but at the same time there is that frustration of not wanting to be marginalized through the projects i’m setting up.

Lots of same like organizations that do great communal work have that problem like private but community based Fab Labs, organizers of temporary space occupation, art collectives,… I find it unfair that while doing impact-full work, the monetisation doesn’t follow. And when you conform to an economical viable plan, you loose the human centered project. So where do community based projects need to place themselves to be able to professionalize but not loose their values out of sight? That was the big itch that was scratching…

But then came a really insightful discussion with a friend and fablab manager who was struggling with the same questions. He started describing the principle of the long tail (90–9 -1) but was adding a second level of community involvement. What he was describing was what i was also searching to create in each of the project: inspire people to care about a certain topic, create vocations and give them a space to thrive while building up a certain income to make it viable for all people involved. When making a scheme of it it looked a bit like this:

I’m not pretending to re-invent the wheel here, but this suits my needs on how i construct projects, it’s a “best of both worlds”. So how does it work: looking at it horizontally you have three levels of possible income:

  • Community: this can be in the form of a monthly fee, usage of the space. It mostly can cover some of the cost but isn’t the most profitable on its own
  • Workshops: We’re in the age of knowledge, and sharing the knowledge is somethings searched for. This creates opportunities for members of the community and has a good profit margin,
  • Jobs: these are classical economical transactions where a job is demanded and an income is received. It’s the most straight forward, but not the easiest to create from the start for community based projects.

On the vertical level we can define the different types of users.

  • Client / Professional: These are the most far apart because the main transaction is one of money. They have a practical relation based on mutual needs.
  • Participant / Tutor: Not only is there a monetary exchange, but also one of knowledge. Both get a bit closer to each other because of this double transaction
  • Member: Finally there is the member of the community that is at the same time creator as a user and becomes therefor one. It’s the core of what makes a community based economical project.

The only thing missing is creating a motion for the user. Being able to start at any stage of the project and climbing up from client to professional. It’s an extra long tail, and we’re not inspiring to transform every client into a professional, but being able to build that road for many to try to walk is at its core the essence of what i thrive to create in any of my projects.

I see in this model a possible explanation of what i want to build: a space where people can enjoy their passion on different levels with the possibility to grow but also just act as the user they want or intent to be. It will not fit every kind of project, some will prefer straightforward job / client privileges, but with project looking into re-inventing the way we produce and consume in an urban environment like tool libraries, fablabs, foodlabs, bike bars, city agriculture, construction projects… it could maybe interesting to look further into this community based economics.

I will for sure dive deeper in the possibility to make this sustainable, and to look at the factors that are needed to succeed in the establishment of such hybrid non/for profit company/organisation/cooperative.

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@yannick, thank you very much for your post, very interesting a surely helpful for many of our members to look into, think and articulate with. Maybe you could give us some feedback on how you would fit our Edgeryders NGI festival in this model of yours? Edgeryders Festival November 19-29: See you there!

@soenke have a look yanniks text. Is this maybe of interests for you and your fellow community researchers?

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No – you are not reinventing. There are models. One could be Amway. Although they and other multi-level marketing companies often promote themselves in uncomfortable ways, they are nevertheless community-building powerhouses. It would be worthwhile to look at what they and similar groups do and see if it can be adapted to your vision. They organized around a model of making money. Another, perhaps more comfortable, might be cooperatives. I am in the Houston are now, but when I was in New England I was a sometime member of the Brattleboro Food Coop. Their model was organized around obtaining healthy food at an affordable price. A third model is Kibbutzim in Israel – they organized around building a nation through agriculture and socialism. Perhaps a fourth model is employee-owned businesses – they organize around fellow employees working together to enable all to be financially successful and satisfied with the value of the work they do and the workplace in which they operate. A few tentative ideas drawn from these models: determine what you want the group to achieve as a group. From there, you may be able to select an output which would enable you to bring together a suitable group of people to achieve it. Does everyone need to be able to do everything? Do you want to develop specialists? Then you can start pre-marketing: marketing your ideas as a core plan to enable you to bring in like-minded partners, so that the plan can cooperatively be fleshed out.

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This is a good overview of existing approaches, actually. Some quick thoughts about this: multi-level marketing seems (to me) profiteering from existing social relations, so it’s rather exploitative. The other models are different, as in one way or another they are about socializing the profits of collective action. Either by all-out socialism (Kibbutz) or by limited socialism that affects one area of life only (purchaser coops, employee-owned companies). The secret sauce is in all cases a mechanism how the efficiency and synergy benefits of collective action are distributed to all participants rather than captured by a few capitalists or “investors”.

But if these approaches are so beneficial for the members, there have to be reasons why they are not more widespread? I see these main issues:

  1. Required scale. To operate a self-supply economy as in a Kibbutz, or a profitable competitive company as in a worker-owned business, it needs a certain initial scale. And starting a community economy at that scale is a challenge.

  2. Rigid distribution mechanisms. Socializing the profits is all nice and fine but depending on the mechanism used to do so it can also squelch individual initiative as there is no direct benefit to such initiative. That’s what makes certain flavours of socialism so unattractive to entrepreneurial spirits.

  3. Globalized competition. Some of these models, in particular worker-owned businesses, have the issue that they can only survive in a globalized competitive economy by taking part in that all-out competition. This has implications for the required scale (see above) and also means that not all the economic potential of a community can be realized because in a pure monetary economy, everyone will on average still (have to) prefer to purchase the same good at the cheaper price, whether that is from China or from a local workshop in the community.

Another model to enable community economics would be community currencies and similar schemes (time banks etc.). They have their own issues though, in that the required collective trust in the system limits the system size to Dunbar’s number (“I’ll only trust this currency if I know that my trade partners are trustable.”).

After thinking a lot about this problem, we came up with a system that (I think) addresses all of these shortcomings. After six years of development, it’s available as PayCoupons now. It creates a community economy sheltered from globalized competition by resolving conditional promises of the form “I’ll do business with you if you do business with me, directly or indirectly”. Resolving this happens automatically with an algorithm we call network bartering. (See also background articles on our blog.)

The irony of the story is how it comes full circle now: without external funding, we’d need an existing community economy as support for testing and deploying such a tool … . Anyway, the tool is there now and fully functional, and we’d welcome any group or project that is able to utilize it in their local community :slight_smile:

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Hi @MariaEuler that much for this. Just touching ground after a vacation, with a design-a-cooperative sprint coming up end of August as well as a data cooperatives workshop, then the opening of a new maker space end of September. The sequencing of activities focusing on community building and / or collaborative prototyping etc is key in all of this for sure. One additional register of such engagement that has interested me lately is how to broaden the focus of start-up culture to include issues of market design - an obvious topic when you are surrounded by people sharing a collaborative / cooperative ethos, but not at all obvious for many others.

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The risk is there, but it’s not a necessary outcome. If your activity strengthens and expands such social relations, then you are not a parasite, but a symbiont. Yannick puts it well:

And, years ago, @accessjames explained to us how Access Space in Sheffield was producing some economic value, and in doing so it produced social capital as a natural byproduct.

I guess what I’m saying is this: nothing wrong in standing on the existing human capital (trust, web of relationships etc.), as long as you are contributing back to it.

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