(chart is explained in more detail in this earlier Gift/Generosity Economy article)
If
you read the business press, you will find, just about every day,
stories about acquisitions and takeovers of small companies by bigger
companies. Some large corporations now brag that their business is
taking over small companies. The studies by experts in corporate
finance have repeatedly shown that in 70-90% of cases these
transactions "destroy value" -- in other words, the value of the
combined entity is less than
the value of the two combining entities before the combination. Yet the
share value of the combined entity is usually greater than that of the
two combining entities. What's going on here?
The corporations
would have you believe that the combination promises "economies of
scale" -- that redundant positions can be eliminated, duplicate
processes eliminated, volume discounts obtained from suppliers, and
efficiencies obtained by combining operations. Anyone who has ever been
through a combination can tell you that this almost never occurs. In
fact, costs rise after the combination because of diseconomies
of scale -- the larger the organization, the greater the hierarchy, the
more the bureaucracy, and the more infrastructure is needed to keep it
all connected. Small is agile. Large is clumsy. There are no efficiencies of scale. So why do these transactions still occur?
In a word, power.
Consolidation isn't about the consolidation of resources, it's about
the consolidation of power. Size gives you four types of power:
- Power over regulators:
Oligopolies of three or four companies controlling an industry (and
this is the case in most industries now -- check out the wonderful blog
Oligopoly Watch
if you doubt me) have the power (and money) to lobby governments to
deregulate their industries, provide them with massive subsidies,
introduce 'free' trade agreements to expand the oligopoly's reach
globally, and introduce and enforce intellectual property laws that
inhibit innovation and block new competitors from entering the market.
We used to have 'anti-combines' laws to prevent this market distortion
but the oligopolies have effectively had all such regulations
eliminated, neutered, or rendered unenforceable. So now governments are
effectively in the back pockets of the corporatist oligopolies. That's
power, and it brings with it enormous profit.
- Power over consumers:
Oligopolies can and do fix prices so that consumers have no choice but
to pay these prices or do without. Those that try to find workarounds
like file-sharing to circumvent oligopoly price-gouging are threatened
with lawsuits and jail by the huge armies of lawyers that the
oligopolies employ. These oligopolies also control the media and
blanket the airwaves with their propaganda. The law of 'supply and
demand' is hence subverted as the suppliers control the market.
- Power over suppliers:
Oligopolies can and do bully suppliers to sell to them at prices just
high enough to keep them solvent and dependent on the oligopolies (this
type of oligopoly, more correctly called an oligopsony, essentially
dictates ever-decreasing prices they will pay to manufacturers or
wholesalers, Ã la Wal-Mart, since there are no significant alternative
ways for manufacturers or wholesalers to get their products to the
consumer marketplace). If you're both a supplier and a customer of
oligopolies (like small farmers for example) you get squeezed at both
ends. They have all the power.
- Power over employees:
Oligopolies can and do bully employees to work for minimal wages and
benefits or have their jobs offshored to struggling nations whose
people are so desperate they'll work for almost nothing. And why are
the people of struggling nations so desperate? Because these same
oligopolies work in cahoots with despots and corrupt officials in those
nations to steal the land and natural wealth of those nations and leave
behind nothing but pollution, waste and destitution. Although the
inequality between rich and poor has never been higher, the power of
'organized' labour has never been lower. The power rests with the
oligopolies.
This is a self-perpetuating vicious cycle. We
aren't going to solve it through political means, or by trying to find
ethical companies to buy from (there are few left, and those that are
left cannot compete with slave labour wages of the oligopolies, so most
consumers can't afford, on their slave labour wages, to buy ethical, quality, or healthy products).
The
only solution lies in walking away from the oligopoly economy and
creating our own Peer Production / Generosity Economy. This alternative
economy is based on maximizing well-being, not corporate profit. It is
based on trust, not power. It is based on sharing and equalization, not
on greed.
To participate in this alternative economy, we each
have to invest something instead of money: our time. The Generosity
Economy is based on knowledge -- knowledge of who can and will do what,
and who needs what. It is based on the liberating principle that
instead of working 'for a living' doing something we hate so we can
afford to buy what we need, we instead produce
what we're good at producing (and like producing), put it on the table
for others to take, and take back (from what others have produced) what we need.
It's that simple. It's entirely economically viable, but it will
require a major investment of time to set up and maintain the
self-managed knowledge bases of what we have to offer, what we need,
and who is available and interested in co-producing with us other stuff
that's needed.
We are already Peer Producing a lot of things:
Open Source software, information and entertainment on the Internet
(Creative Commons), scientific exchange, and social collaborations
(e.g. community barn-raisings and community broadcasters, and volunteer
work, which gives the 'donor' as much as the 'recipient'). Many
non-Western cultures give without expectation of payment, because they
know that an investment in social relationships always ultimately pays
big dividends.
The Net Neutrality champions
are working hard to prevent the oligopolies from increasing the price
paid for Internet bandwidth to producers, including Peer Producers. The
oligopolies want to price uploading out of the reach of the rest of us,
to preserve their oligopoly on production. They want us only to
consume, to download, and of course they want us to be able to consume
only what they produce, at their fixed price.
The whole idea of Peer Production is to let us all become producers, let us all collaborate with others, ad hoc,
where multiple skills, talents and resources are needed to produce
something that's needed, and, because this production is shared,
generously, to let us obtain what we need from others. In the case of
needs that are material (physical goods and services that must be
provided hands on), these Peer Production networks should generally be
local, community-based. Sending goods and people long distances when
more local sources are available is wasteful and dysfunctional (and
remember, there are no economies of scale).
In
the case of needs that are not material (those that can be provided for
virtually, or as bits instead of atoms) the Peer Production networks
can be global, provided anytime from anywhere.
Individually, and
separately, we can't compete with the power of oligopolies. But
together, working collaboratively as peers, we can have far more power
over our own lives, our economy, our society, and the well-being of
all-life-on-Earth, than oligopolies could ever dream of having. A
century ago, to fight the corporatist oligopolies, we organized in
labour unions. Peer Production and the Generosity Economy is the 21st
century 'labour union', united this time not to negotiate with producers, but to render them obsolete, to replace them.
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MADE IN CANADA
trust your
instincts 
