Open Source and Indie Biz – Parallels

This is a supplement to an article published on Medium as well as on DarwianInterlude.  This page is under continual revision. It’s where I make note as they occur to me.

  • Parallels
    • The Makers
      • Like open source – Motivation is to do what we love in a way that expand possibilities for both ourselves and the wider community.
      • Like open source – Work is a source of meaning and a vehicle for our contribution to the wider society.
      • Like open source – Businesses start dedicated to our customers and vision and not to pumping something up and exiting.
      • Like open source – You should be capable of a stable release before getting too full of yourself.
    • The Community
      • Like open source – projects often begin as a natural outgrowth of the efforts of a community of interest.
      • Like open source – Makers are supported emotionally and financially to various degrees by the wider community.
      • Like open source – There’s a diversity of motivation around some common visions. Not all squashed down into a monetization or growth strategy. Unique visions of high quality endeavors.
      • In my biz gear constellates out of community. 60s backpacking. Appalachin Trail. The barrier between fan and pro is permeable. We want to stay connected to our passion and make a living.
      • Like open source – The product can scaffold up through this direct connection to community.
  • The Change
    • Kickstarter
      • Projects and premiums – Peak Designs and all those damn hammocks as eg.
    • Wefunder.
      • Premiums remain but can also offer equity/debt/profit-sharing. Synergy of premiums.
    • Facilitates further evolution in a direction that supports both the Makers and the wider Community.
    • Part of a recognition of the wider range of motivations for economic activity.  Another parallel = selfish gene, classical economics vs Sober & Wilson, Sante Fe Institute, Behavioral Economics. This has resulted in B-Corps, community capital programs, etc.
    • Removes the barrier to entry. Minimize risk to individual investors. Premiums as part of ROI and smaller amounts. (Up to 500 now, raising that is key.)
      Lower cost of allows a greater range of motivations. 50k 5k .5k
    • Intensify the community/maker connection. Extends companies as natural outgrowth of community.
    • Removes choke point where diversity of interests are squashed down to a narrow stock market / exit strategy.
    • Currently funding suffers from mono-culture in models.
  • Alignment of interest.
    • Should go both ways – value returned from equity. To align interests there should be significant equity position in same class of stock by founders. Common interest in a method to get value from the efforts of founders and the cash of investors. (SlingFin as example.)
    • Challenge – as in all small and/or privately held enterprises: liquidity when needed
      • Process has to acquire, absorb, transform and then secrete capital
        Implications of wider range of investment motivations?
      • Owning what you do vs exit = transfer of interest vs diffusion into uninterested capital. There are some promising experiments.

Asabiya Part 1: Introduction

Peter Turchin’s War and Peace and War is one of my favorite sort of books: those that dig into my thoughts and continues to influence them by providing a perspective to work with…or sometimes against. I find his analysis of the patterns of history intriguing and I believe he throws a light on our political landscape.

This will take on much of the flavor of a book report. In fact, it will look much like a bad book report in which I substitute long quotations for my own reactions and analysis. So be it. There is a direction. I am building to an open ended point…some questions I find interesting… which does contain the seeds of a thesis but tries not to narrow down to too fine a point. My format will be to add a skeleton of an outline to frame up material from the book and then add some observations that spark off Turchin’s work.

  •  The anchor for Turchin’s analysis is social cohesion.

Following the fourteenth-century Arab thinker Ibn Khaldun, I call this property of groups asabiya. Asabiya refers to the capacity of a social group for concerted collective action. Asabiya is a dynamic quantity; it can increase or decrease with time. Like many theoretical constructs, such as force in Newtonian physics, the capacity for collective action cannot be observed directly, but it can be measured from observable consequences

  • Social cohesion => successful societies. Essentially, the groups that do the best job of cooperating are the most successful in competing with other groups. Turchin’s interest is in the creation and collapse of historical empires and he proceeds in his analysis by gathering case histories.

“Generally, in a struggle between two groups of people, the group with stronger norms promoting cooperation and the most people following such norms has a greater chance of winning.

  • Inequality erodes social cohesion. Successful societies have, in the past, built empires which then erode social inequality leading to the eventual collapse of the empire.

The phase of the secular cycle also determines the trend in social and economic inequality—whether it increases or decreases. This aspect is of particular interest because of the corrosive effect that glaring inequality has on the willingness of people to cooperate, which in turn underlies the capacity of societies for collective action

  • Turchin uses history as his laboratory and makes the following points about contemporary politics:
    • One can’t necessarily generalize his pattern of empire going forward. We may be in a post Imperial world (witness the EU vs historically warring states in Europe.)
    • But one can understand the development of historical societies and something about current societies since they are the result of their history.
    • Turchin uses Italy as an example because it provides two matching societies:
        • North Italy vs South Italy  – He makes the point that, if Italy was divided between north and south, we would have one of the best and worst performers in Europe.

      The disparity in economic development between the Italian north and south is striking. Today the south is rural and poor, whereas the north is urban, industrialized, and wealthy. Few people realize just how well off the Italian north is, because when we see economic statistics for Western Europe, they are typically broken down by country, rather than by regions. Italy as a whole is in the middle of the pack, but its northern regions, such as Lombardia and Emilia-Romagna, are at the very top of the list. The overall rank for Italy is pulled down by its poor Mezzogiorno.

        • He sees this disparity as rooted in societal function vs dysfunction
        • First,  he cites a study that took a sustained look at possible measures of social cohesion

      In 1993, Robert Putnam published Making Democracy Work: Civic Traditions in Modern Italy. “Social capital,” as Putnam explains, “refers to features of social organization, such as trust, norms, and networks that can improve the efficiency of society by facilitating coordinated actions.” 

      How can one measure “institutional performance,” that is, how well regions are governed? Asabiya (or social capital) is the key. However, capacity for collective action is a complex, multifaceted property of society, and therefore we cannot expect a single way to measure it perfectly. Putnam and his co-workers, however, came beautifully close. They chose 12 indicators, ranging from measures of operation efficiency such as bureaucratic responsiveness and budget promptness to a quantification of services provided to the public, such as the number of daycare centers and family clinics.

      When Putnam and co-workers finished estimating the institutional performance for each Italian region, they saw a remarkable pattern. There was very strong north-south gradient in how well regions were governed. The regions in the Po Valley such as Emilia-Romagna and Lombardia were consistently at the top of rankings in institutional performance, whereas southern regions, such as Campania (the region around Naples), Calabria (the “toe” of the Italian boot), and Sicily were at the bottom.

        • Putnam’s study is a picture of effective function but the flip side is a picture of dysfunction

      Well before Putnam, and even before the Italian experiment in devolution of powers to regional governments, anthropologists knew that something was wrong with the society of the Italian south—the Mezzogiorno, as it is known in Italian. A particularly interesting study is that by the American anthropologist Edward Banfield, who spent a number of years in a southern Italian village during the 1950s and 1960s. In 1967, he published a book detailing his findings, The Moral Basis of the Backward Society. Banfield describes the extreme atomization of the southern Italian society, in which all cooperative efforts are limited to the smallest possible societal unit, the family. Relations even to such kin as cousins, and sometimes even grown-up siblings, are rife with distrust and lack of cooperation. Community-level cooperative efforts are virtually impossible. Banfield called this type of society “amoral familism,” and defined its basic philosophy as this: “Maximize the material, short-run advantage of the nuclear family; assume that all others will do likewise.”

        • Turchin believes the root of this society lies in the far past in Roman slavery.

      Millions of slaves, captured during the wars of conquest, flooded Italy during the second century B.C. Because slaves had no human rights, and legally could hold no property (in practice, some masters allowed them to accumulate funds to buy themselves out of slavery), their presence in massive numbers made the Roman society during the late Republic even more unequal than is usual in pre-industrial states

      The distinction between slaves and freemen is perhaps the most extreme form of social inequality. Thus, widespread slavery must be a very corrosive influence on the society’s asabiya. In fact, empirical evidence shows slavery has a deep, and lasting, negative impact on “social capital.”

      It was, thus, the rise of inequality and especially of its ugliest form, slavery, that began corroding Roman asabiya during the second century B.C.

      …southern Italy—the core region of the defunct Roman Empire—was an asabiya black hole.  <> Peninsular Italy, including Sicily, remained an asabiya black hole from the collapse of the Roman Empire to this very day

  • He does not, of course, believe that southern Italy remained a static society. He believes that it is a damaged and ineffective one. One that has never managed to heal itself from a persistant legacy of poverty, feud, and bad government.
  • With the issues phrased this way, it’s hard not to draw some parallels to the US. That will be the topic of contemplation next post. For now, here’s something that caught my eye recently and sparked this whole train of thought

You are looking at a map of violence based on an analysis from an NGO, the Institute for Economics and Peace, based in Sydney Australia. Red is bad. Blue is the best. The rest range in between, color coded as you’d expect.