A global history of societal regulation

Why commons-based institutions now need to regulate the market and state, ‘cosmo-locally’

In this article, we want to outline a history of economic and societal coordination mechanisms, and how they are regulated, and give our readers a sense that the current meta-crisis requires a fundamental overhaul of such regulatory mechanisms. The regulation we are interested in here is how human institutions keep a certain balance between human activities, and the need to protect the natural environment, but also how they maintain relative social peace between different human groups.

The internal and adaptive self-regulation of the tribal world

Let’s start with the tribal, ‘hunter-gathering’ form of societal organization which is based on kinship (real or symbolic), and at first, relative nomadism, before settling down in more horticulture oriented villages. It would seem that there is no external institution here for the regulation of human to nature balance. The regulation is ‘internalized’ in mythologies, customs, and forms of ‘sacred property’, in which certain natural environments are protected by ‘spiritual owners’ that cannot be antagonized. This should not suggest a perfect harmony but signals that the participatory nature of the relationship, and the limited access to destructive technologies, severely limit the capacity of human groups to permanently damage their environments. In this model, human beings behave ‘adaptively’ to their natural environment. Nevertheless, severe environmental damage by humans and resulting social failure can be traced back to the Neolithic, i.e. the advent of more permanent settlements and the beginnings of agriculture. The main ‘modes of exchange’ or forms of value, are commoning and gifting. Commoning means exchanges between individuals and a totality, and was the main form in nomadic communities; while the gift economy, in which a gift creates the necessity for a counter-gift, was the peace-making social technology to maintain peace between villages in more complex tribal societies.

Imperial Regulation: The Empire rules the markets, but respects the commons

This model of course radically changes with the advent of more complex class-based societies and the institution of ‘Empire’. Now we have a class-based society, with division of labor, social differentiation, and independent institutions that keep social order, such as the state and the army. The imperial model already has a universalist ethos, it aims to rule the whole known world and is multi-ethnic. 

What is important for us in this context are the following characteristics:

• Empires are hostile to tribalism but do not destroy the commons, which remains a balancing institution on the level of  local agricultural communities. The existence of ‘res communes’ remains part of imperial ideology.

• Imperial peace and the imperial state enable the growth of markets and trade, but at the same time, severely regulate the markets so that it cannot destabilize their societies.

Michael Hudson has studied the Mesopotamian examples and shows how monarchs instituted periodic ‘Jubilees’ and ‘Clean Slate Legislation’, which periodically annulled the debts and freed the ‘bond slaves’. The aim of such measures was to protect the internal social stability of the empire. Negative interest money, also a standard in the European Middle Ages, was designed against the hoarding of capital.

Michael Hudson, in this book ‘The Destiny of Civilization’,  makes a useful distinction between the ‘harmony’ model of Mesopotamia and the East Eurasian empires, and the conflict model which started in Greece and determined the logic of the Western model. In the latter model, starting with Classical Greece, the rentier class took power at first, and this created sufficient unrest to lead to  democratic counter-revolutions. In this model, based on conflict, legal institutions were created to protect the interest of the mass of the people, such as Greek Democracy or the Tribunate in Rome.

Here are some examples from China and Japan:

• In China, there were regular State Monopolies and Price Controls: Chinese emperors often established state monopolies on essential goods such as salt, iron, and grain. These monopolies allowed the government to control prices and supply, preventing market volatility that could lead to social unrest. For instance, during the Tang Dynasty, the government implemented the ‘Hedi’ policy, purchasing grain during times of surplus and selling it during shortages to stabilize prices and ensure food security.
  
  

• In Japan, the Tokugawa Shogunate's (1603–1868), implemented the "Sakoku" (closed country) policy, severely restricting foreign trade and influence. By controlling external economic interactions, the shogunate aimed to maintain social order and prevent market forces from destabilizing the feudal system.It also established the Dōjima Rice Exchange in Osaka to monitor and control rice prices, preventing speculation and ensuring a stable food supply. 

To some degree, the European Middle Ages were a temporary return to this harmony model, but the lack of ‘Empire’ created the unique conditions for the merchant class to become more autonomous, acquire its own power and eventually create, in alliance with the monarchic dynasties, a capitalist society based on different regulatory principles.

I have called this interplay between the extractive logic of market and state, competing for power and resources with other ‘peer polities’, and which inevitable over-use their resource base, and the countervailing power of the protective and regenerative effects of the commons-based institutions, as a ‘Pulsation of the Commons’, which reaches its maximum capacity during Dark Ages, where states and markets may completely shrink, and be temporarily replaced by hegemonic commons institutions, such as those of the monastic communities.

Ultimately of course, the extractive nature of the institutions of the civilizational system, i.e. markets and states, could not be fully compensated for by the local commons, but these commons nevertheless had a compensatory role for the local communities. Of course, these commons would be most endangered in the slave-based systems, that tended to replace free farmers by imported and enslaved workers, who lacked any self-organizing capacity.

The Political Economy of Capital-State-Nation and the destruction of the commons

In Europe, after the devastation of the religious civil wars of the Reformation, a new system of regulation emerges: the political economy of capital, which, according to the formulation of Kojin Karatani in ‘The Structure of World History’, consists of three integrated structures:

• The community becomes the Nation

• The ‘state’ becomes a Nation-State

• The market becomes Capital

These three institutions keep each other in balance, they regulate each other, but essentially, it is now the role of the national state to regulate the national market, as best as it can. Karl Polanyi, in his classic,  ‘The Great Transformation’, notes how this is done through the lib-lab dynamic, which corresponds to cycles of the political economy, called Kondratieff waves:

• During a emerging new wave, production booms, and labor is needed, which is good for the working class, so this generally results in welfare reforms and wage increases; however, this hurts the profitability of capital

• Thus, a peak is reached, which is a supply crisis affecting capital, and leads to the stirring of a ‘conservative’ counter-revolution. Think of 1973-1980 as the peak crisis of the last wave;

• The nation, under the leadership of the counter-revolution, then deregulates and financializes the market again, which is good for capital, but not so good for labor. It ends in the final systemic crisis, which is a demand crisis, a crisis of debt. Think 2008. This is the final crisis of a particular ‘wave’, requiring fundamental reform to a new managerial and productive arrangement.

In this model, though the State is the ‘official’ regulator, it is in fact  the Nation, as political community, that has the power to influence the nature of that regulation. Essentially, industrial society can be read as a ongoing struggle for ‘more market’ vs ‘more state’, spurred on by the periodic dominance shifts in the national political community.

Note that the commons has completely disappeared from this scenario. Unlike in Empire, the commons are fought and ‘enclosed’ and are replaced by private property, or in the case of the social commons of the working class, they are ‘statified’. The commons, shriveled to a bare minimum, no longer play they regulatory rule, especially in the advanced and core countries of capitalism. The welfare state provides its services to the consuming workers, but the price for the assistance is atomization and the loss of a culture of solidarity. 

The system relies on the power of the state, mobilized by the social and political forces of the Nation, to keep the market periodically at bay. But the market forces eventually become the strongest in this tri-partite system, as the competing coordination modalities, such as fascism and Soviet communism, failed to offer an alternative regulatory regime. As Classic Greeks would have predicted, democracy tends to become oligarchy over time. Money influences the votes more than the votes influence money. This would eventually destroy this regulatory regime.

The disturbance of the neoliberal Global Market

The nation-state equilibrium started to be disrupted in the 1980s. Neoliberalism is in fact, also a failed attempt at global regulation. Several events, such as the conservative counter-revolution of Thatcher and Reagan, the collapse of the Soviet Union in 1989-91, and the failure of the first attempt at democratic coordination of the economy in Chile (Cybersyn), contributed to the emergence of a new world order in which, for the first time in history, transnational capital could significantly escape the regulation of the nation-states, rendering the latter inoperative. This was of course done consciously and with the collaboration of neoliberal nation-states.

The result has been a failure of societal regulation both at the national and the trans-national level.

• At the national level, the lib-lab dynamic equilibrium became largely ineffective, giving the impression to national electorates that politics had become inconsequential, and change was impossible. This has slowly led to the surge of the right-populist revolts that we are witnessing in the core countries of Western capitalism. They are driven by a desire to restore the nation-state system and the influence it accorded to popular forces.

• At the trans-national level, the revamped Bretton-Woods institutions, such as the IMF the World Bank, and the newly instituted WTO, were themselves skewed towards the new neoliberal order, weakening further the capacities of the world populations to obtain new equilibria.

In short, there is no longer a proper set of institutions that can restore the equilibrium in the new global world order: the Nation is no longer able to force the State to regulate the Market.

There are for the moment, three emergent responses to that crisis:

• The Western mercantile option, favored by the World Economic Forum (WEF), which aims for global, domain-specific multistakeholder alliances, led by transnational capital, allied to weakened nation-states and approved NGOs. There is no place for the legitimate democratic power of the national people in this scheme.

• The new BRICS multipolar alliances under the leadership of the Russia-China axis, which aims to overcome the U.S. hegemonic regime and reinstate the control of the nation-state, as well as a inter-state system of negotiation by such states, though mostly in the format of a post-Westphalian ‘civilization state’. This model assumes the state as the representative of their national people.

We could theoretically distinguish the two main solutions as:

• Inflating financial power at the global level, enshrining the control of capital (which, somewhat ironically, is experienced as an attempt to create some kind of world state equivalent by the anti-globalist movements), in which conflict is mitigated by the multistakeholder consensus seeking. In this model, the great absentees are the national ‘people’ and their autonomous democratic power within the nation-state.

• Re-inventing a distributed state system, which is a reminder of the Empire model, and its search for harmony. In this system, the states negotiate global agreements on behalf of their peoples. Internally though, many of those states may not be actually representative regimes.

In the final analysis, this is a competition between two core-periphery blocks, attached primarily to one or the other of the extractive institutions that were dominant in the civilizational period.

Logically, it would make sense to think about restoring the lost equilibrium by inflating the state at the global level, i.e. the instantiation of a world state, which would be a scary prospect for many, realizing how removed it would be from the concrete experiences of the mostly still localized world populations.

But notice that another logical outcome has not been tried yet: that of ‘inflating the power of the  Commons’.

The solution: restoring the global equilibrium through cosmo-local commons institutions

As I have argued in previous essays, reflecting the pattern of the Pulsation of the Commons mentioned just above, the ‘commons’ should be considered as a real human institution, and a protective and regenerative counter-weight to the extractive pressures of markets and states. But surely, purely local commons, which have been under centuries of pressure in the capitalist order, are not enough to be such a counter-weight ? Indeed, they are not, if they have to face not only the pressure of potentially hostile nation-states, and the combined power of transnational capital. They are a necessary (entropy can only be remedied at the local level), but not sufficient condition for a return to ecological and social balance. Too many aspects of the response to the meta-crisis still need planetary cooperation and coordination.

Following Geoffrey West’s differentiation between sublinear relationships, where efficiency is lost through scaling, and super linear relationships, when scaling leads to more efficiency, then mere localization will be mere sublinear in its effects, but cosmo-localization, i.e. the combination of interconnected local commons with global (‘cosmic’) digitally enhanced cooperation, may be superlinear, and thus, exactly what is needed to ‘inflate’ the commons.

So if the ‘commons gap’ can be identified as the missing counter-power to the interstate and the transnational financial system, then cosmo-local commons-based institutions are what we need to build today, to achieve a new type of trans-local Magisteria of the Commons.

If we look at the more recent history of the commons:

• We see a return of massive knowledge sharing practices since 1993 (invention of the Web), i.e. digital knowledge commons in the form of free software, open design and shared knowledge depositories

• The emergence of a new capacity for trans-local self-organization, i.e. the mutual coordination of global collective labor in the open source movement, and later, after the invention of Bitcoin as globally scalable currency, through  the invention of the universal ledger (Blockchain), the capacity to finance this work. Ethereum and Web3 are the technological infrastructures for making possible massive decentralized coordination.

• This coincided with a massive growth in urban and rural commons, i.e. the re-emergence of local, resilience-oriented, civic-driven, contribution-based, productive communities.

What is missing is a convergence between these two worlds, that of local productive communities engaged around the common access to vital contributory common goods, and that of the capacity to global coordinate such projects around the world, and finance them.

So imagine the following:

• Local alliances of regenerative projects unite and create common digital identities and ‘sovereignties’, allowing them to autonomously engage with the regenerative sections of crypto capital.

• Domain-specific alliances, say of all community land trusts in a trans-national context, are created, relying on global knowledge commons and shared innovation, common protocols of cooperation and coordination, and shared financing capacity.

• These two types of trans-localized forces can co-own parts of their global commons infrastructure, while at the same time, regenerative parts of crypto capital create mechanisms for distributed co-ownership at the local level.

What I imagine therefore, are mechanisms of distributed property entanglements which can create trans-local, trans-national, in other words ‘cosmo-local’ forces that can increasingly create the social power to be a counter-institution to global financial dominance, and also vis a vis the alliance of perhaps revitalized nation-states that are the wish of the neo-sovereignist alliances now on the upswing. These forces, which can also be alliances of human and non-human forces, can be the seed forms for what I just called ‘Magisteria of the Commons’. In this scenario, both market and state institutions, and if they disappear in their current form, the practices of market exchange and of the public management of common territorial life, become subject to the regulation by these cosmo-local commons institutions.

Most economic and social value creation would no longer be the domain of extractive oriented business corporations that need to be regulated by an external state, but would be conducted by emerging ‘Fourth Sector’ organizations, such as DAO’s, which seamlessly integrate regenerative market dynamics, agreements with various territorial and bioregional management entities, and the permissionless contributions of commoners participating in the system. These organizations internalize externalities, and practice predistribution of value, rather than post-extractive redistribution.

To make this imagination real, consider this:

• We have a global infrastructure for the coordination and finance of translocal labor, based on ‘stigmergy’, i.e. coordination through social signals in open ecosystems; and regenerative market exchange mechanisms ; these mechanisms are enmeshed in global cosmo-local productive alliances, that protect their joint commons, including non-human life and scarcifying resources.

• Global agreements, to avoid war and conflict around these resources, create a layer of thermo-dynamic accounting, enforcing ‘global thresholds and allocations’, for the long term preservation of resources and non-human life. These limits, within which human communities take free decisions (this approach is called ‘context-based sustainability’) , are enforced by multi-stakeholder institutions, in which all stakeholders, including the people, are involved, to protect their common heritage.

This would emphatically not be a ‘world state’ approach, nor would it be dominated by extractive-oriented financial forces, but this would be a dynamic system of interlocked multistakeholder aligned commons-protecting institutions.

These Magisteria of the Commons would fill the current regulatory gap.