Solutions for Self-Reliance

The Peer-to-Peer Economy – A Turning Point in Human History


This Peer-to-Peer economy that is rising up to replace the Industrial/Information economy is difficult to see in its totality, but is everywhere around us.

Stop me if you’ve heard this before: the invention of the internet represents a turning point in human history.

I hope you have heard this argument before, if only because I’ve made the case for it time and again on my Corbett Report podcast over the years. But I find myself coming back to this theme because I think that, like any time in which people are undergoing a fundamental shift in the fabric of society, this revolution is little acknowledged and even less understood by the majority of the population.

The truth is that the time we are living in at this very moment is as crucial a turning point in the history of our civilization as the industrial revolution was, and for largely the same reasons.

When most people hear this type of “internet revolution” talk these days, their tendency is to roll their eyes and go on with their day. After all, we’ve been hearing about this revolution since the dawn of the World Wide Web, when the buzzword “Information Superhighway” was drilled into our heads ad nauseum by any number of now-laughable news segments, infomercials and tutorials. But here we are two decades later and we’re still working long hours, still struggling to make ends meet, still struggling to send our kids to college and still struggling to afford a few weeks vacation a year.

So what’s changed? Now we’re able to Skype our parents a few times a year for next to nothing instead of using a landline and paying long-distance fees? Now we can keep track of our friends (and even our “friends”) through Facebook instead of face-to-face interaction? Now we can tweet pictures of our breakfast for the world to see? Big whoop.

But these examples miss the real point of the revolution that’s taking place right under our nose. What is happening right now is not a change in communication technology, or at least not merely so. It’s a change in the way our economy is organized and, as a result, the ways in which we interact with each other. It is giving rise to new concepts of community and new forms of organization. And, for the first time in human history, this revolution is instantaneous in nature and global in scope.

Let me explain. The industrial revolution kicked off in earnest around the midpoint of the 18th century with the development of a number of technologies in a range of fields, including the spinning jenny, the blast furnace, the steam engine and others. These technologies didn’t just improve the productivity of textile workers or allow for deeper coal shafts or speed up transportation, although it did all of those things and much more. More to the point, these technologies created entirely new possibilities.

Jacob Leupold Steam engine_1720

Jacob Leupold Steam engine 1720. First design of a high pressure steam engine from his book Theatri Machinarum Hydraulicarum II.

The new pig coke iron blast furnaces enabled developments in metallurgy that led to the widespread availability of materials like iron. As more inventions started to make use of these metals, from the Rotherham plough to the threshing machine, demand for precisely engineered metal parts grew. This spurred the development of machine tools, which were themselves made with the newly-available metals from the blast furnaces and in turn allowed for the mass production of inventions, further increasing productivity and stimulating more inventions. The process fed on itself and spread to every corner of the 18th century economy, not just in England where many of these inventions originated, but throughout the Western world.

Casting pig iron

Casting pig iron, Iroquois smelter, Chicago, between 1890 and 1901.

It wasn’t long before these changes began to have a profound impact on society at large. The predominantly agrarian society of the 18th century began to shift into the more urban and centralized society of the 19th and 20th centuries. The artisans and craftsmen of the feudal era gave way to the factory workers of the industrial age. The powerful guilds of Medieval Europe were replaced by trade unions and workers movements. The world had entered the Industrial Era, complete with an industrial economy, an industrial worker, and an industrial society.

The benefits of this system are obvious to us today. The development of almost all of our modern creature comforts derives directly or indirectly from the technological innovations of that era, and it is a testament to the value of these developments that there is virtually no one on the planet today who willfully chooses to live like a Medieval peasant. However, the drawbacks, too, are obvious. In the transformation from a rural, independent, self-sufficient society to an urban, centralized, highly specialized one, we have lost much of the freedom and opportunity for simple pleasures that came with such a lifestyle, not to mention the intangible benefits of a more intimate connection with the soil and the elements. With this increasing dependence on the mass-produced luxuries of modern life has come, perhaps inevitably, an erosion in our political freedoms, to the point that talk of self-sufficiency in our modern age is actively derided, as in the Prepper movement, and violently opposed, as with recent SWAT team raids on raw milk producers.

Raw Milk Raid

Actual footage from a raw milk raid on Rawesome Foods, an organic food co-op in California.

For those living through that industrial revolution, it didn’t take long for them to realize just how profound a change was occurring to their way of life, even if they could not envision the final form that change would settle on. The invention of textile machinery and creation of giant cotton mills in 18th century England gave rise directly to the early 19th century Luddite movement, taking its name from the (probably mythical) “Ned Ludd” of Anstey, who smashed two stocking frames in a fit of passion after being whipped by his boss for idleness. The development of the threshing machine gave rise to the Swing Riots of the 1830s, instigated by farm laborers forced to the brink of starvation by the new agricultural tools that were putting them out of work. The squalid tenements of the factory workers, many displaced from their family farms and rural homes out of economic necessity, gave rise to workers movements, labor riots, political unrest, and, ultimately, the Communist agitation of Marx and Engels.

Luddites smashing textile mill

Luddites smashing textile mill

It was obvious that something fundamental had changed, not just in the individual experience of individual workers, but in the economy itself. The era of mass industrial production had ripped people away from the product of their labor. No more were they producing hand-crafted goods for customers they knew personally. No longer did they need to foster skills that would help ensure them a lifelong career as a tradesman. No longer did they know their neighbors or need to develop relations with others in their community. Now, except for the fortunate few who could afford to run the mills and factories, they were mere industrial robots, performing repetitive, unskilled actions and living in urban slums.

Obviously, the industrial civilization has been reformed, refined and adjusted since its earliest iterations. As the factory conditions improved and the price of mass manufactured goods dropped, it became possible for more and more of those robotic workers to join the middle class and improve their quality of life. And as society shifted away from mere manufacturing and toward knowledge work, the factory itself was increasingly replaced by the corporate cubicle.

To a large extent, people still live in this largely 20th century economic reality: still detached from the product of their labor, still disaffected and disempowered by their life on the corporate treadmill, still detached from their neighbors, their community, and the land around them. Something is still missing from our lives, the appeal of connection with each other and with nature that we all understand as our ancestral past. But the idea of returning to that former way of life—a way of life that allowed for an economy in which artisans and craftsmen thrived and in which people lived in close-knit communities—seems a pipe dream, impossible in a world where we are dependent on the conveniences of modern life. For generations, we have been more or less sold on the idea that the dissatisfaction of our modern, cookie-cutter industrial civilization is not a mere historical contingency, but part of the human condition itself.

But then, as the famous cartoon of the befuddled scientists at the blackboard puts it, a miracle occurred. A global decentralized network for the instantaneous electronic transmission of information was invented. Designed to be physically indestructible by virtue of the fact that it exists in no particular location and relies on no central server or node, this network, dubbed the “Internet” (with the capital letter of fear and unfamiliarity still employed by official style guides), has become the backbone of a new era of civilization. Not the “Industrial Era,” as before, or even the nebulous “Information Age” we have heard about so much, but the Peer-to-Peer Era. And, like the Industrial Era before it, the Peer-to-Peer Era is creating its own economy, reinventing the concept of work itself and giving rise to new methods of organization and new forms of community.

Also like the Industrial Era, the Peer-to-Peer Era is the end result of a slew of technological innovations. The development of the computer itself was the most obvious technological precursor to our modern revolution, but the invention of the microprocessor, the advent of computer networking, the laying of the telecom infrastructure to enable global networking, and the creation of various protocols to facilitate information sharing are all important parts of this narrative.

And again like the Industrial Era, the innovations of the Peer-to-Peer Era are not just improving the productivity of office workers or increasing access to information or bringing down telecom costs, but creating entirely new possibilities.

At the business level, it is difficult to imagine a system or process that has not been impacted by these new technologies, or is in the process of changing. From teleconferencing to telecommuting to online collaboration, the Peer-to-Peer Era is changing our sense of “where” an office is or how its workers interact. With the advent of online sales, shoppers’ habits are changing and retailers are finding and expanding into previously unimagined markets. As more and more information is digitized and made instantaneously and freely accessible, research and development is made easier and more efficient, in turn increasing the pace of development and innovation. Entirely new business models are being developed and new services are coming online (quite literally).

But even more fundamentally, a new concept of economic organization (and thus a new basis for society itself) is now coming into view. But whereas the Industrial Era made the traditional craftsmen and artisans obsolete and displaced agricultural laborers from their ancestral farms, the Peer-to-Peer era is creating new opportunities for workers to develop and market their own skills and affording those who capitalize on these opportunities the geographical freedom to live where they like.

This Peer-to-Peer economy that is rising up to replace the Industrial/Information economy is difficult to see in its totality, but is everywhere around us.

Take a service like airbnb. It is an almost embarrassingly simple concept, nothing more than a website offering people with a spare room/apartment/house to rent and people looking for a place to stay a place to connect. It weeds out unsavory hosts and unacceptable lodgings by allowing users to rate, review and recommend places they’ve stayed at, creating a marketplace based on reputation (much like eBay). And it is causing havoc for the hotel industry and giving local governments that want to tax short-term occupants a headache.

In the past, if someone wanted to rent a room out to a friend (or a stranger) for a few days or a week, they would have to find a way of connecting with that person, and it would generally be a one-off deal. At best, a particularly good host might be able to count on good word of mouth to let others know that such an arrangement was available. Now people who are renting and those who are traveling have a place to connect, and as a result all sorts of previously unused economic potential is being used, and people who never would have imagined they could supplement or even replace their income with a side job as a micro hotelier are finding themselves doing just that.

Airbnb is just one example of a concept that is now playing itself out in almost every sector of the economy.

Need transportation? Bye bye taxis, hello Lyft and Uber and Sidecar.

Need a specialized trade or service? Bye bye yellow pages, hello TaskRabbit.

Need to sell something? Bye bye newspaper classified ads, hello eBay and Craigslist.

Need a loan? Bye bye bank, hello LendingClub.

The possibilities are almost limitless, and in each case average individuals are being empowered to participate in an area of an economy that they have generally been excluded from, either by government regulation or high barriers to market entry or inability to advertise to potential customers. All of those barriers have been leveled by the internet.

This new form of economic organization has been dubbed the “sharing economy,” and there are certainly services provided under this banner that live up to the name. NeighborGoods provides a website for communities to share bikes, tools, tennis rackets, video games, and just about any other household good you can think of with each other. You can share unworn, unloved or unused clothes with others on thredUP. Travelers have been finding places to stay on their road trip via Couchsurfing for years now. You can even share extra helpings or leftovers from your neighbor’s home-cooked meals on Shareyourmeal.

But “sharing economy” is a problematic term. Yes, some of these sites allow for the free sharing of goods and services with others, but many of them allow or even expect there to be some price for the transaction. Perhaps a more fitting way to conceptualize what is happening is to call it the “Peer-to-Peer Economy.”

Peer-to-peer is a computing term for a type of network in which interconnected and equally privileged nodes (“peers”) connect directly with one another. Unlike traditional client-server networks, a peer-to-peer network has no central server or administrator directing the traffic or hosting the information; instead, the information is distributed throughout the network and nodes can communicate or route traffic directly through established protocols. The peer-to-peer idea was popularized in the late 1990s by Napster, a program that allowed users to share files directly with each other over the internet. But now, websites like the ones mentioned above and hundreds of others are enabling people to “share” everything from spare bedrooms to spare seats in their car to spare meals with each other in the real world.


Left: A network with a central server through which all clients connect with each other. Right: A peer-to-peer network where every node can connect directly with each other.

The analogy with today’s changing internet-dominated economy is apt because the industrial economy, like a client-server network, ran on a system of centralized manufacturing, distribution, and retail of products and the centralization of services. Goods would be mass produced in factories and shipped hundreds or thousands of miles, distributed to outlets and retailers in centralized shopping malls, and purchased (or ignored) by random shoppers. Services would be provided in centralized locations (like hotels) or coordinated by centralized offices (taxi companies).

However, in the Peer-to-Peer Economy, manufacturing can be brought back down to the individual level, as individual craftsmen and artisans can once again find ways to reach their customers directly, this time by advertising their wares online. Services can also be offered on an individual level. In the Peer-to-Peer Economy there is less need for factories, distribution and supply chains, warehouses, and big box retailers and more of a need for skilled individuals with products and services to offer at a price and in a way that they themselves choose.

With the blockchain technology that underlies bitcoin and other crypto-currencies, there is now even a peer-to-peer currency to facilitate these transactions. Although cash, precious metals or other forms of commodity transaction or barter are still favored in face-to-face exchanges, now people can transact with people in another town, another country, or halfway around the world without the need for any central bank, central clearing house, or centralized money transfer middleman. As a decentralized database capable of logging, confirming and recording transactions anywhere in the world within minutes, blockchain-based crypto-currencies have solved the problem of how to circumvent the Industrial Era problem of geographical constraint on private transaction.

This is not just a difference in relationship between producers and consumers in a strictly economic sense; it offers a different way for us to conceptualize and participate in communities and interact with others around us. Through MeetUp, people are finding like-minded people on all sorts of subjects, from cinephiles gathering to discuss movies to birdwatchers organizing expeditions to monetary reformers holding strategy sessions. People are meeting their future spouses through any number of online dating sites. People are teaching themselves calculus through the Khan Academy and learning how to edit home movies via YouTube tutorials. It has never been easier for people to find like-minded people to share interests and passions with, whether those people be halfway around the world or just down the street.

And now, in one of the most exciting potential developments of the next stage of this Peer-to-Peer Economy’s development, these self-organizing communities of interest are beginning to discover how their passion can be tapped, their knowledge mined, and their experience shared with the rest of the world. Computer programmers have long had ways of sharing programs for the benefit of the wider community, but now that idea is being used by everyone from farmers who are sharing open source blueprints for farm implements and machinery to car enthusiasts who are sharing open source blueprints for a roadworthy car chassis, to modern artisans who are sharing open source blueprints for computer-designed objects that can be downloaded and printed into reality on desktop 3D printers.

Any one of these developments taken by itself may seem unimportant, even trivial. But taken together it becomes more apparent that the internet has not provided us with a mere upgrade to the telephone, but a new structure upon which to erect a different type of society. And whereas the industrial society wrenched people away from communities, away from the land, and away from the products of their labor, the Peer-to-Peer society is enabling people to become craftsmen and artisans once again, and reconnecting people to the community around them. And who ever said the world was a boring place to live?

Originally published on The International Forecaster.

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