Composting Capitalism: How Peer Production Reduces Waste and Builds a Regenerative Economy

Economies, like ecosystems, live and die. Firms rise, accumulate resources, compete, and eventually collapse. In capitalist economies, when firms “die,” their accumulated knowledge, infrastructure, and social coordination often rot away—liquidated, privatized, or locked behind intellectual property walls. This resembles an ecosystem where fallen trees never decompose, where nutrients are trapped in unusable form, leading to stagnation and scarcity.

But ecosystems thrive precisely because death is followed by composting. Fallen matter is recycled into fertile ground for new growth. In this essay, we argue that commons-based peer production (CBPP)—the collaborative creation of digital and material goods outside market logics—functions more like an ecosystem’s forest floor than capitalism’s landfill. By reducing resource misallocation, improving recycling of knowledge and materials, and minimizing losses from organizational “death,” CBPP offers a regenerative economic logic better suited to a resource-constrained planet.

Capitalism’s Brittle Death Cycle

Classical capitalism places the firm at the center of wealth creation. As Ronald Coase (1937) explained, firms exist to minimize transaction costs in markets, but their survival depends on profit maximization and competitive advantage. This firm-centric orientation generates two consequences relevant here:

1. Systematic misallocation. Studies of productivity in the U.S. and developing countries show large gaps in efficiency due to resource misallocation across firms. Hsieh and Klenow (2009) estimated that if resources were reallocated efficiently within China and India, productivity could double. Yet capitalist competition does not automatically achieve this efficiency because firms hoard knowledge and protect rents.

2. Wasteful organizational death. When firms fail, much of their accumulated know-how disappears. Bankruptcy law prioritizes creditors, not the preservation of productive ecosystems. Scholars of “zombie firms” (Caballero, Hoshi & Kashyap 2008) have shown how capitalism often keeps unproductive firms alive artificially, tying up resources, or else destroys them abruptly, wasting assets and labor skills.

From an ecological perspective, capitalism’s mode of death is more landfill than compost heap.

Peer Production’s Regenerative Logic

In contrast, CBPP is structured around open sharing, modularity, and iterative reuse. Yochai Benkler (2006) identified its core logic: contributions are motivated by reputation, reciprocity, or shared purpose rather than exclusive profit, and outputs are governed by open licenses that prevent enclosure.

Digital domain. In free/libre open-source software (FLOSS), when a project “dies,” its code can be forked, archived, or absorbed elsewhere. Nothing prevents reuse. Wikipedia contributions are never lost to bankruptcy; even abandoned wiki projects remain available as digital commons. Blockchain ecosystems illustrate this dynamic: when protocols fail, treasuries are forked, communities migrate, and innovations are reused. The composting function is built into licensing and architecture.

Material domain. Less visible but equally significant are initiatives extending CBPP into physical production. Sensorica, for instance, is pioneering “open value networks” to coordinate, distributed fabrication without firm boundaries, using p2p economics. Shared labs, designs, and processes persist beyond the life of individual projects. Contributions are tracked through accounting systems that distribute benefits and preserve reputational value, ensuring continuity across cycles of activity.

Here, organizational death leads not to loss, but to recycling of designs, know-how, and physical resources.

Comparative Analysis: Landfill vs. Forest Floor

We can now sharpen the analogy:

• Capitalism resembles a landfill economy. Knowledge and resources pile up in proprietary silos. When firms fail, much of this potential is lost. Misallocation arises because information about resource use is privatized and distorted by price signals.

• CBPP resembles a forest floor economy. Contributions, once made, remain accessible. Redundancy exists, but in an evolutionary, generative way (like genetic diversity), rather than wasteful duplication. “Death” of projects or initiatives fertilizes new ones through modular reuse.

This shift has measurable implications. Studies of FLOSS communities show higher innovation recombination rates than in proprietary systems (West & Lakhani 2008). In material commons, open hardware projects reduce R&D duplication by orders of magnitude compared to competitive proprietary firms.

Trajectory of Growth and Consolidation

CBPP has grown exponentially since the 1990s. FLOSS today underpins most of the internet infrastructure (Red Hat, Apache, Linux). Wikipedia dwarfs any proprietary encyclopedia ever attempted. Blockchain ecosystems are creating new transactional and governance infrastructures outside state and corporate control.

Meanwhile, material peer production infrastructures—makerspaces, fab labs, agroecology commons, and networks like Sensorica—are building the capacity to produce physical necessities collaboratively. New incentive systems—contribution accounting, impact metrics, reputation economies—are emerging to complement or replace profit as motivational drivers.

This infrastructure represents not only expansion but consolidation: the creation of durable institutions capable of self-reproduction outside capitalism’s financial circuits.

A Speculative Horizon: Composting as Dominant Logic

If CBPP were to become the dominant economic logic, what would change?

1. Reduced misallocation. Resource allocation would be guided by transparent contribution accounting and community needs rather than firm profit maximization.
2. Improved recycling. Designs, processes, and infrastructures would persist and be iteratively reused rather than lost to bankruptcy or enclosure.
3. Less redundancy. Instead of each firm duplicating R&D in secrecy, open collaboration would minimize waste while retaining beneficial diversity.
4. Survivability under scarcity. On a planet facing environmental degradation and resource depletion, models that recycle and compost efficiently will be more adaptive than ones that waste and hoard.

In short, economic models that compost cope better with ecological limits. Capitalism evolved in an era of relative abundance; CBPP is evolving as a survival strategy for scarcity.

Conclusion: From Waste to Regeneration

Capitalism’s mode of economic death is brittle, wasteful, and misaligned with ecological realities. Commons-based peer production, in both digital and material domains, offers an alternative—one that recycles contributions, preserves know-how, and builds regenerative capacity.

The angle of “death and composting” helps us see what is at stake: an economy that locks nutrients in landfills of failed firms versus one that turns every death into new life.

As natural resources tighten, the adaptive advantage of composting economies will only grow. The choice ahead may not be ideological but ecological: whether we cling to a brittle, wasteful system or nurture the forest floor of peer production already spreading beneath our feet.

References (selective):

• Benkler, Y. (2006). The Wealth of Networks. Yale University Press.
• Coase, R. (1937). The Nature of the Firm. Economica.
• Hsieh, C.-T., & Klenow, P. J. (2009). Misallocation and Manufacturing TFP in China and India. Quarterly Journal of Economics.
• Caballero, R. J., Hoshi, T., & Kashyap, A. K. (2008). Zombie Lending and Depressed Restructuring in Japan. American Economic Review.
• West, J., & Lakhani, K. (2008). Getting Clear About Communities in Open Innovation. Industry and Innovation.
• Sensorica: https://www.sensorica.co

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Sensorica is implementing its OVN model for material peer production. You can donate to support the amazing people who have sacrificed for the past 15 years to refine peer production.

NOTE: This post has been produced with the help of AI, encapsulating Sensorica's 15 years of uninterrupted experience with material peer production, embracing complexity, leveraging emergence.

The Missing Bridge: Why Complexity Economics and Peer-to-Peer Must Converge

There is a puzzle at the heart of our economic future. On one side stands the Santa Fe Institute (SFI) and its decades-long work on complexity economics — models of self-organization, emergent order, adaptive systems, and networked coordination. On the other side stand the theorists and practitioners of the peer-to-peer (P2P) economy — commons-based peer production, open source software, blockchain, DAOs, and open value networks.

Both are deeply concerned with the same reality: economies as complex adaptive systems. And yet, strangely, these two intellectual worlds rarely acknowledge one another. Even stranger, some within each camp view the other with skepticism or even disdain.

But this gap is a problem. It must be bridged. Because P2P is no longer a fringe utopia — it is an established, indispensable mode of production. And complexity economics is no longer a fringe critique of neoclassical orthodoxy — it is a robust and maturing science. Together, they could form the intellectual foundation for a new economic paradigm.

Two Camps, One Reality

The Santa Fe group

The Santa Fe Institute has, since the 1980s, pioneered the study of complex systems: ecosystems, cities, innovation networks, and economies. Its economists — W. Brian Arthur, Sam Bowles, Herbert Gintis, and others — have shown how economies are not equilibrium machines but evolving ecologies of agents, governed by feedback loops, adaptation, and emergence. Their work builds mathematical and computational models that reveal the hidden dynamics of cooperation, innovation, and systemic fragility. But this group never really framed their research in “P2P economics” terms.

W. Brian Arthur

Arthur is one of the founders of complexity economics. He challenged equilibrium-based models by introducing concepts such as path dependence, increasing returns, and positive feedbacks. His book The Nature of Technology (2009) also showed how innovation is a cumulative, evolving process. Arthur provided the theoretical grounding for viewing economies as evolving, adaptive systems rather than static, rational ones.

Stuart Kauffman

Kauffman pioneered theories of self-organization and autocatalytic sets in biology, later applying them to economic and social systems. His models of NK fitness landscapes and the adjacent possible helped explain how complexity emerges from local interactions. For economics, he reframed markets as evolving ecosystems where novelty constantly reshapes dynamics, which aligns well with distributed, peer-based innovation).

Samuel Bowles

Bowles bridged economics with evolutionary biology and anthropology, focusing on cooperation and altruism. He showed how institutions, norms, and moral behavior evolve and sustain complex societies, often contradicting the “rational selfish actor” assumption. His work on inequality, common goods, and social preferences overlaps with peer production’s focus on collaborative governance of shared resources.

Herbert Gintis

Often collaborating with Bowles, Gintis integrated game theory, behavioral economics, and evolutionary dynamics. He co-developed the concept of strong reciprocity, where people cooperate and punish defectors even at personal cost, a foundational insight for understanding why commons-based peer production can be stable and productive. His work made cooperation and fairness central to complexity economics.

John Holland

Holland developed the theory of complex adaptive systems and genetic algorithms. He formalized how simple rules at the micro-level can generate adaptive complexity at the macro-level. His frameworks inspired much of SFI’s modeling tradition and provide tools that could be directly applied to peer-to-peer networks, blockchain systems, and open-source ecosystems.

The p2p group

Reviewing the work of influential theorists like Benkler, Bauwens, Kostakis, Scholz and Bollier, we find that they didn't explicitly theorize p2p as a complexity-based economic model. Complexity appears implicitly in descriptions of networked, decentralized dynamics, but the intellectual lineage is from law, sociology, and political economy rather than complexity science. Complexity is more metaphorical than methodological.

Yochai Benkler

In Coase’s Penguin (2002) and Wealth of Networks (2006), Benkler frames commons-based peer production primarily in terms of transaction costs, information economics, and social motivations. He does not explicitly invoke “complexity theory” as an epistemological base. Instead, he uses a law and economics framework, focusing on modularity, granularity, and human motivation. Complexity is implicit in his emphasis on distributed coordination, but not theorized as such.

Michel Bauwens

In The Political Economy of Peer Production (2005) and later works, Bauwens discusses P2P as a new mode of production, tied to networks, commons, and value creation beyond capitalism.

He occasionally references complexity and self-organization, but not in the rigorous Santa Fe Institute sense. His framing is more political economy + philosophy (post-capitalist, commons-oriented).

Vasilis Kostakis

In Network Society and Future Scenarios for a Collaborative Economy (2014) and Peer to Peer: The Commons Manifesto (2018, with Bauwens & Pazaitis), complexity is sometimes mentioned in relation to self-organization and distributed systems. Again, not a formal engagement with complexity economics, but rather complexity as a descriptive metaphor.

Trebor Scholz

In Platform Cooperativism (2016), Scholz is concerned with power, ownership, and fairness in digital platforms. His work is not grounded in complexity theory at all — it is primarily critical theory and labor studies.

David Bollier

In Think Like a Commoner (2014) and Free, Fair, and Alive (2019, with Helfrich), Bollier focuses on commons governance. Complexity occasionally appears as a way to describe adaptive systems of commons, but his primary references are to Ostrom and socio-legal frameworks.

P2P in practice

The P2P movement, by contrast, begins not with theories or models but with practice. Peer production has built things no government or corporation could:

• Linux, the invisible backbone of the Internet.

• Wikipedia, the only living real-time encyclopedia.

• Bitcoin, a monetary network that is sovereign, unenclosable, and resistant to capture.

• Open biotech initiatives, tackling rare diseases neglected by both states and markets.

These are not dreams. They are indispensable infrastructures. They demonstrate that peer production is the only model capable of producing certain kinds of knowledge, services, and infrastructures sustainably.

When capitalism and socialism both fail to address domains like open knowledge, global coordination, or neglected health needs, P2P steps in. It is not “what ought to be.” It is what already is.

The Complexity in P2P

If we move beyond the narratives of P2P’s main theorists and examine how peer-to-peer production is actually practiced, it becomes clear that it is a paradigm of complexity. Edgar Morin’s seven principles of complexity provide a useful lens here.

1. Systemic principle (interdependence)
   Peer production thrives on commons and shared infrastructures, which exist only in dynamic relation to the communities that steward them. Ownership is not about exclusion but about maintaining interdependence.

2. Holographic principle (the part in the whole, the whole in the part)
   In P2P, contributors are not replaceable cogs; each agent carries the whole project’s ethos in their part. Wikipedia entries, Linux modules, DAO proposals — each fragment reflects the larger whole.

3. Retroactivity (feedback loops)
   Peer governance is reflexive and adaptive. Systems like reputation, merit-based access, and open deliberation ensure that past actions shape present possibilities.

4. Recursive principle (products as producers)
   Peer production is autopoietic: Linux produces infrastructure for more Linux; DAOs fund tools that expand DAOs; knowledge in commons generates more knowledge commons.

5. Dialogical principle (unity of antagonisms)
   P2P economies don’t eliminate contradiction; they thrive on it. Market and commons, intrinsic and extrinsic motivation, autonomy and cooperation exist in tension and dynamic balance.

6. Reintroduction of the subject
   Motivation matters. Unlike mechanistic models of labor, P2P acknowledges voluntary contributions, passion-driven innovation, and the irreducibility of human creativity.

7. Ecology of action
   In complexity, no action guarantees its outcome. Peer production exemplifies this: open contributions are unpredictable, but patterns emerge — stigmergy, protocols, and tokenized incentives channel them into coherent outputs.

Through this lens, we see that peer production is not just compatible with complexity economics — it is its living embodiment.

Morin as the Missing Foundation

This suggests a way forward. While Santa Fe Institute’s complexity economics offers formal models of adaptive systems, it misses a great opportunity by not recognizing p2p as an expression of these systems. Conversely, the p2p theorists have made great progress describing existing p2p initiatives, and have recognize them as manifestations of a new economic paradigm, but they lack the rigorous formalism to be recognized as “real economics.”

Edgar Morin’s epistemology of complexity can provide the missing bridge. It gives us the philosophical grounding to reinterpret P2P as a complexity economy, and it opens the door for applying Santa Fe’s powerful modeling tools — agent-based simulations, evolutionary game theory, network dynamics — to peer production.

The result would not be “advocacy economics”, as p2p is mocked by mainstream economics, but a science of P2P as a core economic reality, recognized alongside market and state coordination as a fundamental mode of production.

Why the Gap Exists

Why then does SFI not embrace P2P as a model of complexity economics? Why do P2P theorists rarely draw on SFI’s formalism?

The reasons are less about reality than about culture:

• Epistemology: SFI is theory-first, model-driven; P2P is practice-first, descriptive.

• Disciplinary divides: SFI’s roots are in mathematics, physics, and biology; P2P’s are in law, sociology, political economy.

• Institutional culture: SFI’s funding comes from foundations, corporations, and agencies invested in markets and capitalism; P2P critiques precisely those institutions.

• Narrative distance: P2P is sometimes dismissed as activist or post-capitalist; SFI positions itself as neutral, fundamental science.

The result is an unnecessary gulf. In truth, both approaches are grounded, both are vital. One builds formal understanding, the other builds working infrastructures.

Why This Matters Now: Collapse of the Old Order

This convergence is not a matter of academic curiosity. It is an urgent necessity.

The global order is unraveling.

• Capitalism is locked in extractivism, financialization, and planetary overshoot.

• Socialism, in its 20th-century forms, has revealed its brittleness and incapacity for innovation.

• Liberal democracies face legitimacy crises, while authoritarian regimes offer no sustainable alternative.

We live in a time of cascading crises — climate, biodiversity, inequality, governance. The existing economic paradigms are not merely outdated; they are actively producing collapse.

And yet, in the cracks of this collapse, peer production has emerged as a proven alternative. It has already built indispensable infrastructures (Linux, Wikipedia, Bitcoin). It is already producing services and knowledge that neither markets nor states can provide.

This is why bridging SFI’s complexity economics with P2P economics matters. It is not about academic cross-pollination. It is about mobilizing intellectual and institutional legitimacy for the only mode of production that may carry us forward.

A Call to Action

It is time to bridge the gap. The Santa Fe Institute and the P2P theorists are not adversaries. They are part of the same story, they are considering the same reality.

Perhaps the solution is a new center for complexity economics and peer production, dedicated to studying and scaling these practices as legitimate, indispensable economic forms. Or perhaps it begins with a simple act of recognition: to see peer production for what it already is — the complexity economy, alive and growing.

If we can align these forces, we may yet find a way forward through collapse. P2P economics is not only real; it may be the escape hatch of humanity as the old order fails. To ignore it is folly. To embrace it is possibility.

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Sensorica is implementing its OVN model for material peer production. You can donate to support the amazing people who have sacrificed for the past 15 years to refine peer production.

NOTE: This post has been produced with the help of AI, encapsulating Sensorica's 15 years of uninterrupted experience with material peer production, embracing complexity, leveraging emergence.

Are We Living Through Collapse? Complexity, Digital Technology, and the Future Beyond Capitalism

The word “collapse” usually conjures images of sudden catastrophe: cities abandoned, empires falling overnight, institutions crumbling in chaos. But collapse can also look much slower — a gradual unraveling where the signs are everywhere but hard to pin to a single moment. More and more scholars are beginning to argue that this is where we are today: global society is in the midst of collapse.

This doesn’t mean the world will end tomorrow. It means that the institutions and economic logics that sustained industrial modernity — capitalism, liberal democracy, and even state socialism — are increasingly unable to cope with the world they have helped create.

The Case for Collapse

The idea that we are living through collapse is not new, but it has gained momentum. In The Epochal Crisis of Global Capitalism (2024), William Robinson describes a multidimensional breakdown: economic stagnation, political disillusionment, deepening inequality, ecological tipping points, and rising geopolitical conflict. For Robinson, this is not just another downturn — it’s an epochal crisis, one that capitalism cannot resolve within its own logic.

Earlier, Giovanni Arrighi and Beverly Silver (2001) saw capitalism entering a period of systemic turbulence. Historically, capitalism reinvented itself through cycles: expansion into new territories, technological revolutions, or the rise of new hegemonic powers. But those options are running out. The system has become too global, too integrated, too complex to stabilize.

Even the once-optimistic theories of a “post-industrial” society have soured. Daniel Bell’s vision of a knowledge-driven utopia has given way to precarious work, weakened institutions, and deepening social divides. Critics like Vogt (2016) and Zakaria & Buaben (2021) argue that the promise of post-industrial progress has curdled into a narrative of crisis.

Varieties of Collapse

So what do scholars mean when they talk about collapse? It depends on where you look.

• Some, like Joseph Tainter (1988), see collapse as the cost of complexity: societies become so elaborate and bureaucratic that the benefits no longer outweigh the costs.

• Others focus on ecological overshoot. Our industrial civilization has pushed planetary systems beyond their limits, and shifting energy sources may not be enough to prevent systemic breakdown (Solé, 2023; Tales, 2023).

• Political and cultural theorists point to institutional fragility. Civilizations often fall not just because of external shocks but because elites overreach, institutions lose legitimacy, and cultures fail to adapt (Butzer, 2012; Winter, 2024).

• Finally, integrated models see collapse as an emergent property of complex socio-ecological systems, driven by feedback loops that spiral beyond control (Abel, Cumming & Anderies, 2006).

Each mechanism highlights a piece of the puzzle. Taken together, they suggest that collapse is rarely the result of a single cause — it’s the outcome of interacting crises that reinforce each other.

Complexity: Collapse from Within

If there’s a common thread, it’s complexity. Complexity is not just an external pressure; it’s something we generate ourselves.

Digital technology is the clearest example. It has made our lives more interconnected than ever, expanding the scale and speed of human interaction. But as scholars like Buzan & Lawson (2014) and Robinson (2024) point out, digital capitalism also makes the system more fragile. Information technologies create new possibilities for collaboration and innovation, but they also multiply interdependencies, making societies harder to govern.

In theory, complexity should make systems more adaptable. But as Malaina (2014) warns, capitalism has appropriated the language of “complex adaptive systems” to present itself as resilient, when in fact digital complexity is driving it closer to the edge. The very networks that promised resilience may be generating fragility.

New Forms Emerging in the Cracks

Yet collapse is not only about endings. It can also be about beginnings.

Scholars like Yochai Benkler and Michel Bauwens have observed something remarkable: the digital world has given rise to commons-based, peer-to-peer forms of production. Think of Wikipedia, open-source software, or community-driven projects where valuables are created collaboratively rather than through markets or states.

Benkler (2006) calls this commons-based peer production — a logic of cooperation that operates outside capitalist property relations. Bauwens (2020) frames it as part of a transition to post-capitalism, where distributed networks and shared resources become the backbone of a new order. Others, like Schismenos, Niaros & Lemos (2020), propose cosmolocalism: producing locally while sharing knowledge globally, combining resilience with cooperation.

What makes these models promising is that they seem better suited to a world of complexity. Rather than concentrating power in rigid hierarchies, they distribute coordination across networks. They are more adaptive, more participatory, and potentially more sustainable.

Conclusion: Living in the Interregnum

The Italian Marxist Antonio Gramsci once wrote: “The old world is dying, and the new world struggles to be born. Now is the time of monsters.” That line captures our moment well.

The signs of collapse are all around us: ecological breakdown, political polarization, economic fragility, technological disruption. But at the same time, new forms are struggling to emerge. Commons, peer production, and networked collaboration may not yet be dominant, but they reveal that alternatives to both capitalism and socialism are possible.

If industrial-era institutions are collapsing under the weight of complexity, then the question is no longer whether collapse will happen — but what comes after. And in that sense, the experiments happening in digital commons and peer-to-peer networks may offer more than just interesting curiosities. They may be early blueprints for the societies capable of surviving — and thriving — in the ruins of the old.

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Sensorica is implementing its OVN model for material peer production. You can donate to support the amazing people who have sacrificed for the past 15 years to refine peer production.

NOTE: This post has been produced with the help of AI, encapsulating Sensorica's 15 years of uninterrupted experience with material peer production, embracing complexity, leveraging emergence.

Beyond the Ledger: Why Blockchain and DAOs Fall Short for Complex Economic Organizations, and How OVNs Point the Way Forward

Synthesized with AI from documents developed by Tiberius Brastaviceanu, with the help of Sacha Pignot

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Introduction: The Global Economic Transition

We are witnessing a profound transformation in the architecture of global economic activity. The traditional capitalist system, rooted in firm hierarchies, proprietary assets, and market-based transactions, is giving way to a networked economy. This emergent configuration is typified by commons-based peer production (CBPP), open source collaboration, distributed knowledge networks, and peer-to-peer (p2p) collaboration. Examples abound: permissionless blockchains, distributed scientific research initiatives, decentralized media platforms, and open educational resources.

In parallel, the digital infrastructures enabling these formations are evolving. Initially celebrated as a breakthrough in decentralized coordination, blockchain technologies and Decentralized Autonomous Organizations (DAOs) are revealing inherent limitations when tasked with modeling complex economic processes and sustaining full-fledged economic organizations. In contrast, newer agent-centric approaches—such as the Open Value Network (OVN) model built on Resource-Event-Agent (REA) accounting, the Valueflows vocabulary, hREA logic, and Holochain as a distributed substrate—are showing greater promise.

This blog post draws from the experience of real-world p2p production networks such as Sensorica, and analyzes the foundational limitations of blockchain/DAO-based systems while advocating for a hybrid architecture of economic coordination.

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The Limitations of Blockchain and DAOs for Complex Economic Processes

1. Smart Contracts: Deterministic, Rigid, and Passive

Smart contracts are finite state machines. While they enable conditional logic and self-enforcing agreements, they suffer from key constraints:

• Lack of agency: Smart contracts cannot initiate actions; they passively await external transactions.
• No adaptivity: They cannot learn or evolve in response to new contexts.
• Low expressiveness: They model narrow rule-based interactions but cannot handle rich workflows, commitments, or evolving plans.
• High operational cost: Every interaction incurs gas fees, limiting granularity and frequency of updates.

Thus, smart contracts are excellent for certain trustless operations (e.g., escrows, auctions) but fail to capture the dynamics of real-world production, collaboration, and adaptive planning.

2. DAOs: Governance Without Production

DAOs were designed to manage funds and collective decisions. While conceptually intriguing, most DAOs reduce governance to token-weighted voting and budget allocation. They lack:

• A production grammar: DAOs manage treasuries, but not the economic processes that generate and transform valuables.
• Contextual roles and coordination: All agents are flattened to token holders; there is no representation of task-specific expertise or social embeddedness.
• Traceability of contributions: There is no natively supported way to account for who contributed what, how, and with what impact.

In essence, DAOs are governance shells with limited economic depth. They serve as digital cooperatives but do not embody operational infrastructures for economic activity.

3. Blockchain Architecture: Consensus Bottleneck and Global State

Blockchain relies on a globally shared ledger, secured by consensus. This introduces:

• Scalability issues: All agents must agree on the same state, which limits throughput.
• Privacy limits: All state changes are visible to all participants.
• Poor fit for diverse local contexts: Global rules enforced via consensus do not adapt well to context-sensitive collaboration.

This model is inherently brittle for complex organizations with multi-scale, asynchronous, and context-specific workflows. Moreover, blockchain-based architectures are grounded in a low-level computational model (deterministic, transactional, state-machine driven) that is ill-suited for expressing complex, adaptive, multi-agent economic systems. In formal terms, blockchains are positioned near the low end of a spectrum of computational expressivity. At best, they enable finite state automation with strict constraints on complexity, timing, and semantic nuance.

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The OVN Alternative: A Better Model for Complex Economic Organizations

The OVN model, in contrast to DAOs, emerges from a different epistemology. It begins with a high-level computational model—inspired by relational, agent-based, and process-centric modeling paradigms. According to the computational model taxonomy, blockchain-based systems score low in agency, adaptivity, composability, and reflexivity, while the Valueflows + hREA + Holochain stack achieves high scores across all of these dimensions.

1. Economic Grammar Based on REA (Resources, Events, Agents)

Rather than model transactions, the REA ontology models the economic processes involved in the generation and transformation of valuables:

• Resources: Tangible and intangible inputs/outputs.
• Events: Actions that change the state or availability of resources.
• Agents: Participants that perform or are affected by events.

This triad allows us to describe flows of contributions, transformations, dependencies, and engagement in economic processes in a way that is semantically rich and computation-friendly.

2. Valueflows: A Shared Vocabulary for Distributed Economic Activity

Valueflows is an open vocabulary that extends REA for networked, post-market economies. It enables:

• Semantic interoperability: Different agents and systems can coordinate using a shared language.
• Contribution accounting: Track who did what, how, and in what context.
• Workflow modeling: Represent plans, intents, offers, and actual events.

Importantly, Sensorica works with a triadic model of value, inspired by Peirce's semiotic triangle. In this view, value is not a property or substance but a relation among:

• A valuable (a material or immaterial reality),
• A token (which can be money or any symbol representing the valuable),
• A valuation, which is partly subjective and partly inter-subjective, mediated by social and cultural processes.

This model supports non-monetary forms of exchange, such as barter, mutual credit, or symbolic recognition, and can also extend to non-human living systems.

3. hREA: Economic Logic Engine

hREA is a modular implementation of Valueflows. It handles:

• Economic event validation
• Consistency of process flows
• Resource tracking and provenance

It enables agents to run autonomous, interoperable, and accountable economic logic locally—without requiring consensus from a global ledger.

4. Holochain: Agent-Centric, Contextual, and Scalable

Unlike blockchain, Holochain:

• Is agent-centric: Each participant maintains their own source chain.
• Supports local validation: Data is validated within shared contexts.
• Avoids global consensus: There's no single state to agree upon.
• Enables fine-grained privacy and contextual governance.

This makes it ideal for heterarchical, fluid, and evolving networks of contributors, such as those found in CBPP or global p2p design networks.

In computational terms, Holochain systems are closer to distributed multi-agent systems with reflexivity, learning, and local memory, akin to high-level adaptive stigmergic environments. This makes them inherently more suited to modeling real-world economic ecosystems.

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Sensorica: A Case in Point

Sensorica is a pioneer OVN experimenting with open hardware, contribution accounting, and stigmergic coordination. It:

• Tracks contributions across roles (engineering, documentation, outreach)
• Attributes valuations to contributions through social processes
• Allocates shares of generated income based on these valuations
• Coordinates distributed contributors asynchronously

This kind of accounting and coordination cannot be achieved only using smart contracts or DAOs without major workarounds or reliance on centralized, off-chain infrastructure. But blockchains with smart contract capabilities (ex. Ethereum and Cardano) offer stable and secure transactional functionality. Sensorica is currently transitioning from a Web2 REA-based infrastructure to a native p2p economic network, which uses Valueflows, hREA, and Holochain to build the stigmergic digital economic environment, and smart contract capable blockchain technologies (ex. Ethereum and Cardano) to build the a secure transaction layer (for currency, credencials, certification, etc.). This shift is intended to enable greater scale, autonomy, and context-awareness. See PEP Master venture for example.

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Conclusion: Toward a Post-Market, Networked Economy

Blockchain and DAOs were necessary steps in the decentralization of economic infrastructure. But their computational models are too limited to support the full complexity of economic life. As we transition from a market-based economy to a networked, peer-driven economy, we need:

• Richer representations of production
• Fluid, role-based coordination
• Context-aware decision-making
• Interoperable semantic infrastructures

Open Value Networks, built on REA + Valueflows + hREA + Holochain and using Blockchain for transactions offer a realistic and field-tested path forward. They model economic processes, not just transactions or governance. They reflect the network logic of contemporary collaboration and can sustain resilient, open, and adaptive institutions.

For economists interested in designing the next generation of economic infrastructure, it's time to look beyond the ledger.

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References

• Computational Model
• DAO vs OVN
• Sensorica's Next Gen. Infrastructure development efforts
• Value
• Sensorica

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You can contribute to Sensorica's efforts to build p2p economic infrastructure. 

Sensorica is implementing its OVN model for material peer production. You can donate to support the amazing people who have sacrificed for the past 15 years to refine peer production.

Integrating Holochain, Mattereum and OVN: A Framework for Peer Production

From Happenings Community: 

Sacha Pignot has kindly shared the latest blog from his own Alternef Digital Garden with us at hAppenings.community this week! Sacha introduces one of his visionary projects: a revolutionary convergence of decentralizing technologies; Holochain, hREA, and Mattereum. He walks us through the key elements of his integration, exploring how these complementary tools empower resilient, sustainable economic models that prioritise cooperation and equitable value distribution. Sacha is a full-stack developer with a deep knowledge of decentralizing tech, peer-to-peer networks and a passion for education and travel. Amongst the projects he’s contributing his talents to is hAppenings.community’s Requests & Offers HC/MVP. We’ll be sharing more about our progress in the coming months.

Read more here... 

How Sensorica OVN handles material resources

 

Dive into Sensorica's OVN model