Chapter3

Chapter 3: Evolution of Accounting 
Carlota Perez (2002) has defined a framework for technological evolution based on a series of recurring technological revolutions. Each one of these comprises two phases: an installation phase, where new technological innovations are gradually introduced and diffused in the economy; and a deployment phase, where their dynamics are actually harnessed and optimized. Between the two phases lies a turning point, usually triggered by a financial breakdown (e.g., 1929 crash; 2002/2007 crash), and it is followed by a period of economic recession. This turning point provides a vital space for the necessary institutional reforms to take place for the deployment of the new technologies. 
Blockchains are broadly discussed as disruptive technologies with the potential to change the way societies function. However, that is a rather superficial use of the term and not substantially connected to actual disruption, i.e., causing discontinuities in the trajectory of technological development. It is often compared to the internet and the profound changes that it has brought about. In the Perezian framework, the internet has been one of the key technologies that were widely diffused in the installation phase of the ICT revolution. This process was indeed disruptive and has profoundly changed the ways people connect, communicate and collaborate on a global scale. 
To date, blockchain technology has not effectuated any further disruptions in these patterns. However, we believe that the generic concept of distributed ledgers, enabling an internet of verified transactions in the context of physical production, holds great potential for various desirable outcomes for societies. It can thus shape new institutions that will allow us to deploy the full potential of the ICT revolution. 
In earlier work, Kostakis & Bauwens (2014) distinguish three potential scenarios for the deployment phase of the ICT revolution: 
The first scenario sees a regression towards traditional proprietary capitalism. Blockchain technology can be instrumental in this scenario, by enabling the enforcement of strict property rights, especially in the areas of information and knowledge. 
The second scenario concerns the rise of cognitive capitalism, where knowledge, software and culture are commodified and serve as the driving forces for profit creation. This scenario is reflected in the powerful netarchical platforms, like Facebook, Amazon and Uber, where a layer of P2P sociality is enabled and generalized, but is also manipulated and monetized in a rent-seeking pattern. Here again, blockchains may serve to optimize this process of accumulation, focusing on efficiency gains in slashing transaction costs, data integrity and security. 
The third scenario envisions mature CBPP, emancipated from the prescriptions of profit maximization and perpetual growth. Here, P2P communities have acquired the means to form the types of institutions that can foster sustainable forms of social production. This is the trajectory that underpins our analysis and interpretation of the tools covered in chapter 2. Even though they may not be explicitly oriented towards the abolition of capitalism, they offer post-capitalist aspirations on different levels. 
As we explained in chapter 1, double-entry bookkeeping has historically served this key function with regards to capitalism. The German historical economist and reputed analyst of capitalism Werner Sombart (1902), has been one of the leading scholars identifying this function of scientific accounting in stimulating and unleashing the rationality that thrusts the pursuit of economic profit, an essential element of the capitalist spirit. It was developed by the proto-capitalist merchants of the medieval city-states, and allowed them to procure the institutions that would configure their relation to the feudal order. The effectiveness and coordination of their practices enabled a dynamic force that would eventually form the future of societies. This is best reflected in the analysis of the mercantilist scholar Giovanni Botero (1590) on why the world’s gold ended up accumulating in Venice, where there were no gold mines. 
Polanyi (Bockman et al, 2016) unveils a similar relation between accounting and economic theory. We often place the birth of the capitalist economic theory and practice in 1776, when Adam Smith published the Wealth of Nations. However, Polanyi argued that economic theory develops systematically through the analysis and interpretation of accounting concepts, which in the case of capitalism predate the 18th century altogether. From a different angle, the lack of a basic economic theory for socialism has been one of the key weaknesses for Polanyi concerning socialist practices to transcend capitalism. Karl Marx has created an elaborate theory for the capitalist economy but consciously avoided working on a rigorous theory of the socialist economy. Therefore, if we are to theorize and promote the conceptualization of a P2P and commons-centric economy, we need to understand, interpret and integrate the nascent systematic practices that represent and assess economic facts. 
Thus, the function of accounting practices arguably goes beyond measurement of debts and credits. This is merely a process, which serves to coordinate the steering of economic activities through a shared rationality among agents. In capitalism, this rationality includes the relentless pursuit of profit and is facilitated by the abstraction of economic objects to numerical representations. Elsewhere (Pazaitis et al., 2017), we have identified a different rationality in mutual coordination that is observed in CBPP. It is centered around contributory activity, shared capacities and aggregated integration of outputs. 
Our argument is that a constellation of the necessary tools and technologies is already in place in the practice of CBPP. This means that we have the technological capabilities and the emergent socio-economic practices to accumulate a critical portion of human and natural wealth in the commons. 
Crucial for our argumentation in this report is that the current crop and technologies must be looked at, in their integrative capacity to create a new system of sustainable production. This is the topic of our chapter, but first, we will now complement our overview of tools by looking at accounting and planning frameworks.

[IMG: Place Box 6 here]


New Accounting and Planning Frameworks
Contributive accounting is a form of accounting that takes into account all kinds of contributions, not just waged labor that is recognized by the market.
As Tiberius Brastaviceanu of Sensorica’s Open Value Network explains (see infra in our section on REA accounting):
“Our thesis is that in order to reward all the participants in P2P economic activity, and thus to incentivise contributions and make participation sustainable for everyone, we need to do contribution accounting: record everyone's contribution, evaluate these contributions, and calculate every participant's fair share. This method for redistribution of benefits must be established at the beginning of the economic process, in a transparent way. It constitutes a contract among participants, and it allows them to estimate their rewards in relation with their efforts. We call this the contribution accounting system.”1

Guerrilla Translation: Multi-flow accounting for commons-based, open-value cooperativism

Guerrilla Translation (GT) is a commons-oriented communications collective using P2P accounting for value sovereignty. Their governance/economic model tracks and rewards value in three complementary streams: Livelihood Work (work paid by clients), Love Work (pro bono translation work which creates a knowledge commons), and Care Work (affective and reproductive labour for the collective and its members). GT is a pilot project for Open Value Cooperativism and Distributed Cooperative Organizations (or DisCOs)

Guerrilla Translation was created in 2013 as a livelihood vehicle for activist translators. Influenced by the Occupy and 15-M movements, the collective built social capital with progressive authors and readers by offering pro bono translations of articles dealing with the Commons and P2P, activism, environmentalism, intersectional feminism and other interrelated movements. Their work as a general communications agency is complemented by the pro bono work, which is diffused through the collective's English and Spanish webpages.

Inspired by the P2P Foundation's work on Open Cooperativism, as well as by Open Value Accounting and Feminist Economics2, Over the course of five years, Guerrilla Translation substantially reworked their Open Source governance model to arrive at the "Distributed Cooperative Organization (DisCO) Governance Model,"3 a framework for purpose-oriented and DLT-enabled, but not dependent, cooperative organizations. The model allows workers to mutualize their skills while identifying value flows, making care work visible, and creating plurilingual commons.

The governance model has interdependent provisions for levels of membership, decision-making and value-tracking, we will concentrate on the latter. The best way to visualise how value is created and distributed among the members of the collective is by understanding each of its three value streams (Livelihood, Love and Care) as shares. The first two (Livelihood and Love) are considered productive work and are tracked in credits, typically in relation to wordcount or other easily tokenized deliverables. Although externally the collective uses a sliding scale to set prices for paying clients, internally both Livelihood and Love credits are valued at the same rate. All members accrue credits in both value streams, increasing their relative shares. On a monthly basis, the shares are divested for agency and pro bono work, at a ratio of, 75 and 25% respectively. The collective's net holdings4 in a given month are to be fully paid out, with each member receiving their salary according to their shares rather than their direct labour over the course of that month. In this way, the DisCO model functions much like an income-sharing commune, but with clearly bounded ratios for both types of productive work.

Reproductive work is tracked in hours, not credits. These "care hours" account for two types of care work: for the health of the collective where the collective is seen as a living entity that needs commitment, material inputs and fidelity to its social mission; and for the people within the collective who build mutual trust and intimacy support structures. In the former the collective itself is seen as a trust. Similar to how a Community Land Trust (CLT) perpetuates specific social values through shared ownership structures, Guerrilla Translation's on-chain dimension upholds and enables the collective’s consent to a set of voluntary, self-organised rules. A DisCO's algorithms, whether encoded on a blockchain or not, support the collective in overseeing, simplifying and carrying out the human-level agreements and rules. Once the community's care-orientation is entrusted to the on-chain entity, it is described as a Community Algorithmic Trust (or CAT) which oversees the health of the collective. A DisCO is considered healthy when its administrative and human requirements are taken care of, i.e., all members ensure that both Livelihood and Love work are done at the agreed-upon ratios, that payments are received, relationships maintained, websites updated, etc., a lot of what is typically considered administrative work.

In contrast to self-executing Decentralized Autonomous Organizations (DAOs), which can be excessively centered on quantifiable ("tokenized") aspects, a Distributed Cooperative Organization or DisCO like Guerrilla Translation stresses human mutual support, cooperativism and care work. Its on-chain dimension is a perpetual prototype influenced by the off-chain, lived experience of the collective. DisCOs track three types of work to clarify difficult conversations, and so as not to be algorithmically subjected to an unappealable set of figures. 

The second type of care work is caring for the people within the collective. Guerrilla Translation has developed on the mutual support practices of Enspiral and other commons- and feminist-oriented collectives to ensure that all members are heard, respected and empowered to express themselves, thus ensuring true equipotentiality. Hours tallied for this type of work can then either be paid down monetarily as a different set of shares when a DisCO has start-up funding, or are simply fully decommodified and used as indicators to adjust share ratios in the two productive streams as well as work allocations and needs5.

Guerrilla Translation is part of the Guerrilla Media Collective, a Distributed Cooperative Organization also working on web design, illustration, coding and other communications. As such, it is a pilot project for DisCOs, testing strategies for value sovereignty in the real world. The case of Guerrilla Translation is important because it adopted DLT technologies and peer-to-peer accounting as an already existing, viable collective working in markets and creating commons. Their commons-oriented feminist critique of contributive accounting is unusual in the blockchain space and, as such, provides an alternative framework to build on the practices of Platform and Open Cooperativism for other sectors and publics.

Resources - Events - Agents (REA): An accounting system for networked cooperation and shared supply chains6
Resources-Events-Agents (REA) is a radical innovation for accounting which hitherto has been based on double-entry bookkeeping, which takes an individualistic or corporate point of view, and it is aimed at increasing the capital base of a commercial entity. REA, on the contrary, offers an ‘independent’ ecosystemic view of the flows between participants in an ecosystem and evolved in the context of integrated supply chains. Metaphorically speaking, this abandonment of double entry is, in our opinion, symptomatic of a shift from a capitalist point of view, based on competing corporations or nations, to a cooperative point of view, based on networks of cooperation in joint ecosystems.
REA is a model for an accounting system re-engineered for the information age. It was originally presented by William McCarthy (1982) as a generalised framework designed to cover certain needs for information management that traditional accounting could not adequately address. The main motivation behind the development of REA has been the limitations of double-entry bookkeeping in providing the necessary information to facilitate decision-making in business entities. 
Double-entry is generally limited to monetary representations and dates and is overall alienated from the most functional areas of an enterprise, other than accounting. In most cases, the type of information and the classification systems used in traditional accounting are of little use to non-accountants, and offer limited ability for decision makers to utilise the raw data from the actual economic activities. These limitations result in low integration of the information across the various functional areas of an enterprise, which often leads to inconsistencies and overlaps (McCarthy, 1980; Dunn et al, 2016). 
These limitations are addressed by the REA framework through a semantic approach that aims to reflect real-world business activities rather than double-entry accounting objects. As the name implies, the model creates computer objects that represent: a) Resources (e.g., goods, services, cash, assets); b) Events (e.g., processes, transactions, agreements, contracts); and c) Agents (e.g., individuals, groups of individuals, entities, machines). REA preserved the duality of economic events that is typical of double-entry, retaining the causal relationship between inflows and outflows. For instance, in a productive process, several resources (e.g., components, labor time, machine time) are employed as input, and produce in turn other resources (e.g., products, parts). Simultaneously, REA identifies the agents involved in these events and connects the activities with stock flows, which represent resources moving from one activity to another (Haugen & McCarthy, 2000). This way, it integrates all the planning, monitoring and communication functions, providing greater granularity of data to effectively track the economic activities and inform decision-making (Dunn et al, 2016). 
Research on REA has progressed in recent years and the model has gradually evolved from a generalised framework to a design theory for enterprise systems. It is the basis for the International Organization for Standardization/International Electrotechnical Commission standard on economic exchanges (ISO/IEC 15944-4:2007), while it has been argued that the implementation of the model in enterprise systems, like Enterprise Resource Planning (ERP) systems, can have significant advantages in terms of cost reduction and user experience. Recently developed enterprise systems, such as Workday and REA Technology, have applied the core of the model in their architecture, while many ERP systems that do not fully embrace the REA accounting model are still largely consistent with the design theory. 
Even though REA exists as a model from 1982, it is not yet widely adopted in business, due to path dependencies with the traditional accounting practices. Most ERP systems are consistent with double-entry bookkeeping artefacts in the way they provide information for their applications and thus include general ledger modules for the relevant accounting tasks (Vandenbossche & Wortmann, 2006). As this type of information is mainly handled by accountants and financial managers, they in turn prefer ERP systems to be designed in a way with which they are more familiar. 
On the contrary, network-based organizations could benefit from the logic of semantic representation of their reality to a greater degree than by relying on artificial accounting constructs. Furthermore, it enables the recognition of interactions that are not guided by price signals, or trust-based intra-organizational integration, which is reminiscent of the forms of clusters (Porter, 1990; 2000) or strategic alliances (Teece, 1992), which are already challenging the definition of the boundaries of “the firm.” 
REA enables new organizational and business models, such as the open enterprise Sensorica, which builds on the REA model to support its operation as an “Open Value Network,” allowing diverse agents, individuals and entities to contribute to common projects and build open-hardware solutions. As a design theory, REA envisions to provide a common vocabulary that enables the coordination of all involved parties in integrated systems. It poses as a discontinuity in the design paradigm of electronic accounting systems, where instead of focusing on the automation of traditional accounting artefacts, it conceptualises a new way of representing the complex economic reality. 
An emerging universe of projects is building on the REA potential, such as Mikorizal Software, which is building accounting and open supply chains solutions along with communities that work on alternative economic models. In the same direction, ValueFlows poses as a collective effort to capture and systematize these learnings and work towards the creation of a set of common vocabularies to describe flows of economic resources of all kinds within distributed economic ecosystems. A concise overview of these developments is presented in the Appendix, offered by Bob Haugen who, along with Lynn Foster, is one of the key engineers of REA implementations. 
Reporting 3.0: Direct access to a representation of matter and energy flows in interconnected supply chains
Reporting 3.0 proposes a multi-capital framework, in which resource flows are directly accessible without translation into price signals. The proposal of this ambitious but vital project is to create a Global Thresholds and Allocations Council as a depository of resource availability, including the biocircularity quotients (how much of a resource can be iteratively reused after each cycle of use). Considered as global commons, agreements can be made about the justified use and distribution of a resource within planetary boundaries, which can be used for planning context-based sustainability, i.e., how much of a resource can be used at the local-territorial level (bioregional), or at the level of entreprise or ecosystem of production.
Reporting 3.0 is an R&D platform working on the development of reporting solutions to support a regenerative and inclusive economy. It engages diverse stakeholders from the broader reporting sector in a collaborative environment to co-create and pilot tools and recommendations for emerging economic and business ecosystems. Its motivation is to build on the potential of reporting to increase transparency and, thus, accountability in more informed decision-making to amend degenerative practices and proactively activate regenerative ones. 
Reporting encapsulates different clusters of information that concern a company’s decision-making and sustainability, from performance metrics, impact on capital, and compensation and incentives, to risk and innovation, strategy and governance, and business models. Additionally, Reporting 3.0 also takes into account the long-term view on the value created for the company and its shareholders, but also the value flows in the broader systems in which a company operates. 
To fulfill this role, reporting practices have to evolve7 and allow the inclusion of non-financial aspects such as social and ecological ones. In the early 1990s these attempts began to be examined under the term “Triple-Bottom-Line” (TBL),8 where the three dimensions of business sustainability, social, ecological and financial, were combined. Yet, the TBL approach still fell short in capturing the broader business context, in terms of social and environmental limits and demands at the sectoral, local, regional or global level. 
Reporting 3.0 aims to fill these gaps by setting data and information in the proper context of various limits. It aspires to enable and coordinate a stream of transformations, starting from the micro level of the individual company, moving to the meso level of sectoral and regional systems, and finally to the macro level of global economic, social, and ecological systems. These build around the identification of environmental and social thresholds, i.e., upper and lower limits based on ecological boundaries and social foundations, and allocations, i.e., proportionate shares of the full stock of a resource.9 
Reporting 3.0 asserts to enhance the viability of the use and sharing of resources through a conscious process that employs thresholds and allocations, given that resources always have upper or lower limits of viability, while the use of shared resources always require some system of allocation. Thresholds and allocations can, thereby, tie impacts from micro-level organization with macro-level economic, social, and ecological viability. Ideally, this would inspire, but also provide, the necessary practical tools for companies to integrate this vital micro/macro link in their management, performance and reporting to foster system-level sustainability. 
The above concepts are compiled by Reporting 3.0 in the form of practical blueprints, which provide guidelines and principles to assess company strategies. The reporting blueprints define a desirable trajectory that is then integrated in different domains, including accounting, data and business models. Furthermore, Reporting 3.0 coordinates the pilot implementation of these blueprints to examine their viability and scaling-up potential, as well as a series of support activities for dissemination, exchange, feedback and cross-pollination. 
Reporting 3.0 represents a broader trend in business practices, where the elements of social and ecological sustainability gain prominence through the recognition of (re)generative activity towards both dimensions. Marjorie Kelly (2012) introduces a taxonomy of generative enterprises,10 which imply a historical break with markets and “the market economy,” i.e., an economic system that is exclusively controlled, regulated and directed by markets (Polanyi, 1957). It illustrates a potential for market-oriented agents, with collective forms of ownership and control, to operate and invest for social and environmental goals before profits. 
Nevertheless, it is always useful to also look for new categories to surpass the deadlocks of our current economic reality. The notion of entrepreneurship has also many historical interpretations that are almost inseparable from profit making and exploitation (including self-exploitation). Of course, there is a constant evolution and metamorphosis of those categories, as different groups of people look to challenge and deploy their potential. But we also need to acknowledge the limitations of the various solutions that rely on existing processes, like monetization and quantification, to enable new ones. 
At any rate, the vision of generative forms of entrepreneurship is aligned with the practice of CBPP. Generative, commons-oriented enterprises are embedded in the social and ecological context they operate. They create added value around the social and ecological capacities upon which they depend, and enrich them by creating livelihoods for the productive communities, while contributing to the commons. The generated surplus is reinvested for the well-being of the communities and of the broader ecosystem. 
MuSIASEM: Accounting for material/energy flows and their limits
MuSIASEM, standing for “Multi-Scale Integrated Analysis of Societal and Ecosystem Metabolism,”11 is an important set of tools for biophysical accountability. As current price signals do not reflect the need to conserve resources for long-term sustainability, regions, corporate entities or networks of cooperation need direct access to the flows of matter and energy that they require for operating, and to the possible limits of that use in view of sustainability. To answer this challenge, the project has developed systemic tools that can be utilized for maintaining sustainable production. 
MuSIASEM is an accounting method aiming to analyze socio-ecosystems and simulate certain possible or required patterns of development. It integrates biophysical and socioeconomic variables to establish a link between the metabolism of socio-economic systems, i.e., the processes of energy and material transformation that are necessary for the continued existence; sustainability and reproduction of those systems; and the potential constraints imposed by the natural environment in which they are embedded. 
MuSIASEM integrates data from various levels (e.g., national, regional, local and household); from various issues such as time use, land use and energy consumption; and from various activities and production sectors. An in-depth analysis of the MuSIASEM framework exceeds the confines of the current article, as this would require a fundamental explanation of several concepts from different scientific domains, including Complex Systems Theory and Bioeconomics. Nevertheless, it serves the purposes of the current research to briefly present some of the main features. 
MuSIASEM focuses on the patterns that make socio-economic systems work, and enables a deeper understanding and an assessment of their sustainability. Two fundamental categories in this process are funds and flows. Flows are the elements that come into or out the system, e.g., energy, food, or water, whereas funds are the agents that are preserved in the system and transform input flows into output flows, e.g., capital, people, or land. In other words, flows are the elements that keep the society alive, while funds are the elements that have to be sustained and reproduced in the process. 
Two other useful categories are those of endosomatic and exosomatic metabolism. Endosomatic metabolism is related to food, i.e., energy transformation that takes place inside the human body to maintain its activity and development. Exosomatic metabolism refers to energy converted outside of the human body, that will be converted to applied power under human control, in order to facilitate work associated with human activity. 
Using these categories MuSIASEM enables the connection of two non-equivalent views of the metabolic pattern of a given society: a) the external view, which concerns potential environmental constraints, such as the availability of resources, waste generation and absorption capacity; and b) the internal view, which deals with potential technical and economic constraints, such as the technical coefficients and the requirement of production factors. In other words, the first view assesses the feasibility of the metabolic pattern according to the characteristics of processes that lie outside of human control, whereas the second view focuses on the viability of the metabolic pattern according to the characteristics of human-controlled processes. 
The MuSIASEM approach can be used to analyze environmental constraints of a socio-economic system by generating an Environmental Impact Matrix. To this end, the flows metabolized by a society are mapped in spatial terms (using GIS) in order to study their impact on the metabolic pattern of the embedding ecosystems. Mapping flows against ecological funds in spatial terms allows us to check whether the density of the metabolized flows is harmful for the stability of environmental processes. 
Respectively, MuSIASEM can be used to analyse socio-economic constraints. In this case, biophysical variables are combined with monetary ones to characterize the different activities that constitute the economy. This provides a biophysical overview of economic processes through quantitative representations of society's metabolic patterns. These patterns are then described in relation to the profile of allocation of human activity in the different compartments of society. 
This analysis shows the interrelationships between demographic, economic and environmental constraints. In this direction, MuSIASEM can be used to integrate data referring to different levels of organization and scales (national, regional, local and household) and different dimensions of analysis. 
This combination of biophysical and monetary variables generate a record of time use and exosomatic energy consumption in the different activities that make up the economy. This provides a biophysical overview of the economic process in the form of a quantitative representation of a metabolic pattern, showing the interrelationships between demographic, economic and environmental constraints. 
MuSIASEM is a unique framework that can be applied in different contexts and under various assumptions. It enables the development of tools that can analyze patterns of energy consumption on different levels and create linkages with social and economic indicators, such as monetary flows, employment and output. It may be used to compare the performance in relation to specific desired outcomes across different countries, sectors or regions on various levels of analysis, and to study the effects of these outcomes. It holds great potential in the design of socio-economic systems, either communities, organizations or supply systems, that are socially and environmentally embedded. 

Accounting for Impact and Externalities

[IMG: Place Figure 7 here] 

As Peter Barnes has explained: "EXTERNALITIES are a better-known concept than commonwealth. They’re the costs businesses impose on others — workers, communities, nature and fu­ture generations — but don’t pay themselves. The classic example is pollution. Almost all economists accept the need to “internalize externalities,” by which they mean making businesses pay the full costs of their activities. What they don’t often discuss are the cash flows that would arise if we actually did this. If businesses pay more money, how much more, and to whom should the checks be made out? These aren’t trivial questions. In fact, they’re among the most momentous questions we must address in the twenty-first century. The sums involved can, and indeed should, be very large: after all, to diminish harms to nature and society we must internalize as many unpaid costs as possible. But how should we collect the money, and whose money is it?”12

In the above graph, we distinguish between the four kinds of externalities that are not recognized in the current political economy. Positive social externalities are contributions that bring value to a productive project and that are generally not recognized, for example, domestic and care work is not recognized as ‘valuable’ by market society, and Facebook does not share any of its profits with the co-creators of its value, i.e., its users and their communication work.
Negative social externalities are the multitude of social issues that are negatively impacted by economic injustices and that are currently taken up as issues by the state function or philanthropy, or not at all.
Positive environmental externalities result from activity that benefits ecological outcomes but are not recognized and rewarded. For example, a Community Land Trust movement like the French ‘Terre des Liens’ helps generative organic farmers with access to the land, and these in turn have a major positive impact on decreasing water depollution costs by public authorities, but these presently are not rewarded or financed in any specific way.
Negative environmental externalities are the unrecognized damage done by economic entities.
There is presently no systemic way to finance such generative activities, i.e., those that produce positive outcomes or help repair or undo negative ones, except for financing through taxation and philanthropy, which are not structurally integrated in the production process itself.
At the P2P Foundation we believe that a shift must be made from ‘repairing’ negative externalities after the fact, or ‘outside of the process of production,’ to a system that integrates the accounting and financing of such externalities, i.e., that can systematically reward and finance generative work.
We introduce here two approaches that go in the right direction:
The Regen Network proposes a way to directly finance generative activity, by recognizing impacts on a ledger, tokenizing these activities, and finding ways to finance them in a structural way.
The Common Good Economy approach focuses on impact accounting in terms of achieving recognized Common Good aims, and having firms and productive entities compete to achieve positive impact.
Regen Network: ‘Ecological state protocols’ to verify advances in sustainability and regenerativity
The Regen Network has developed the crucial concept of ‘ecological state protocols,’ which can be both used to verify the attainment of ecological (and social) impacts, and put on a ledger for tokenization and possible financing.
Regen Network is a global community and platform focused on ecological monitoring and regeneration. Regeneration is defined as a process of renewal, restoration, and growth that makes cells, organisms, and ecosystems resilient to natural fluctuations or events that cause disturbance or damage. In this framework, the primary goal of Regen Network is to regenerate the earth's ecosystems. 
Its approach leverages distributed ledger technology to create a systemic multi-stakeholder, market-driven solution to facilitate verifiable ecological outcomes. It is built around the Regen Ledger, a domain-specific public permissioned blockchain. Its core feature is to provide secure functionality for end users into the blockchain itself, instead of a multi-purpose smart contracting language. For this it is based on Tendermint, a general purpose blockchain consensus engine that can host arbitrary application states.13 Tendermint is said to offer several advantages in terms of resilience, interoperability and overall energy consumption, while ensuring high data integrity and federated governance. 
The core attribute of the Regen Ledger is the use of smart contracts to reward ecological regeneration. This is supported by a decentralized system that monitors and verifies ecological state and change of state. It contains three core ecological protocol frameworks: a) Ecological State Protocols (ESPs), which monitor the on-the-ground conditions, generate trusted data and define the algorithms and conditions that verify a certain ecological state or change of state; b) Ecological Contracts (ECs), a smart contract framework for funding and rewarding desired change in ecological state; and c) Supply Protocols (SPs), a framework built on top of the ESP framework to integrate supply chain tracking data in addition to land use. 
The basic function of an ESP is to evaluate the state and change of state for the ecosystem of a specified area. For instance, an ESP could be used as a class of certification, like Organic or Fair Trade to promote sustainable and ethical land use practices. ECs in turn are smart contracts that can generate funding for specific ecological outcomes, either positive change in the ecological state or reparations for damage created. To specify the desired outcomes ECs may reference one or more ESPs to create indices and set thresholds for the results, and scale the rewards. Finally, the Supply Protocol (SP) framework may be used to tie the ESP framework into the supply chains, by combining different data sets. 
The data for the verification protocols are gathered by various sources. From raw remote-sensing data and analyses using vegetative and water indices, GIS datasets and bioregional sensor networks, to user-collected data concerning information on the soil, the practices applied, handheld instruments, or other specific data required for the ESP. 
Organizations with various roles may issue tokens on top of Regen Ledger when certain Ecological Contracts are fulfilled. This way, a new perception of value creation can be promoted that is tied with the resilience of the bioregions supporting human activity. The Regen token model aims to create economic incentives for investment on applications that support generative activity. The Regen Ledger will issue its native token, XRN, which will function as a mechanism for the accounting of ecological value. 
Regen is oriented towards market-driven solutions to support regenerative outcomes. Nevertheless, it acknowledges the broad criticism of the current carbon trading system for its limited real world impact. To address this, Regen proposes the creation of a marketplace for verified regenerative carbon credits. 
A potential application of the Regen model could be in regenerative agriculture, which encompasses a system of farming principles and practices that increase biodiversity, enrich the soil, improve watersheds, and enhance ecosystem services. For instance, no-till farming has been widely discussed as a farming practice that enhances soil quality and reduces the risk of erosion, by growing crops or pasture without the application of any form of soil preparation by mechanical agitation, such as digging, stirring or overturning. It has been estimated that no-till farming can be twice as effective as a carbon sequestration management practice14 (i.e., a natural or artificial process to remove carbon dioxide from the atmosphere and gather it in solid or liquid form). 
In this context, Regen can provide methods to differentiate between till and no-till farming, using remote sensing and GIS, to assess agricultural lands and monitor the long-term changes in soil health due to these management practices. These data can be embedded in different ESPs to determine desired ecological outcomes and linked to the use of these practices. In turn, farms that adhere to regenerative practices according to the sequestration results they yield can be financially rewarded using the XRN token system. 
The ability to monitor and compare the impact of regenerative practices vis-à-vis non-regenerative ones can unlock vast opportunities as to predicting long-term shifts in carbon sequestration of land, before any changes are evident at the ground level. This is particularly relevant for the support of regenerative practices, as any detectable changes in soil carbon would otherwise take up to 10 years to become tangible. On the contrary, it is vital to encourage these types of practices in order to achieve global carbon drawdown. 
From a more critical perspective, the tools and methods created by Regen Network are still operating largely in a logic to tilt market-based forces so as to make regenerative activity appear as “a good investment.” To that effect, they are based on measurable data to coordinate outcome-based rewards, and are therefore still applying some form of abstraction to social and biophysical processes. However, Regen Network nevertheless provides a novel approach to encode ecological externalities on the production and distribution level. 
From this angle, government or regulatory agencies, on any level, can leverage the Regen solutions to implement policies oriented towards certain environmental goals. Moreover, they may strengthen the current supply system of certifications, by increasing transparency and efficiency and by reducing the costs of implementation, which can enhance the role of more and diverse actors in the process, including farmer communities and local stakeholders. This way, Regen Network takes a first step towards more inclusive and multi-stakeholder forms of governance in the critical domain of food provisioning. 
The Common Good Accounting System: Competing for positive impact
The Common Good Accounting System describes the positive and negative impact of economic entities, by calculating the effects of economic activity in 17 clusters related to the Common Good. The system offers specific versions for productive entities (firms) and for territorial entities (cities and regions). Through this mechanism, firms and productive entities start competing for achieving these aims, and are rewarded for it with lower taxes and higher support, while those that fail to achieve these aims are subjected to higher taxes and less subsidies.
The Common Good Economy approach has been proposed by the Austrian economist Christian Felber15 and a pan-European movement of about ten thousand members. In 2018, about 2,000 entities16 experimented with the accounting tools developed by the project. Starting with a legal analysis of European democratic constitutions, Felber noticed that they all contain articles stating the economy must serve the common good, and that there is no constitutional basis for the fiduciary obligation to maximize shareholder profits. Hence, firms should be assessed on their capacity to achieve common good aims. Contrary to accepted opinion, the common good is not a fuzzy concept, but can be exemplified and measured by a cluster of 17 goals that have accrued wide social support, such as improving the environment and biodiversity, or improving social equity, gender balance, etc. Financial and economic sustainability are necessary, but are only a subset of why firms should be ‘in business.’ By accepting such a Common Good accounting scheme, which is voluntary for the moment, firms start competing with each other in an entirely different way, by actually improving their positive social and ecological impacts. They should be assessed in this way by society and public authorities, with incentive schemes, such as taxation and subsidies, that are geared towards rewarding those that achieve this type of positive impacts. At some point in the future, when the movement is confident that the accounting schemes function optimally, it will advocate for political measures to make such accounting mandatory, based on the existing constitutional clauses.
[IMG: place figure 7.5 here]
Multi-layer integration: How the new technologies fit together 
The tools presented in chapters 2 and 3 comprise only a small part of the overall landscape, but are illustrative of a possible and necessary set of techno-social solutions for a fair and environmentally sustainable mode of production and distribution. There is in fact an ever growing number of projects evolving as we speak that are not necessarily less important than the ones presented. However, an all-inclusive documentation would not only be an almost impossible task, it would also hinder the comprehension of this text. In the following sections, we briefly explain the rationale behind our selection, which simultaneously delineates the main trajectory of our argument on how these emerging tools fit together. Our aim is thus to draw the contours of a common vision to, hopefully, increase awareness and alignment among the various dispersed efforts. 
Earlier, we summarized the main lines of criticism on the limitations of the design of blockchain technology, while acknowledging the useful and necessary advances currently discussed under the topic of distributed ledgers. In other words, we believe it is necessary to move towards post-blockchain ledgers. 
This is where the Holochain project comes in. In the blockchain, every transaction needs to be verified against the whole ledger, which requires an exponential increase in resource use to validate new blocks. Moreover, the idea of a “world computer” has strong oligarchic elements in its design. Both proof-of-work and proof-of-stake protocols do not present fair mechanisms for the distribution of power in decision-making. Proof-of-work creates soaring demands in energy and processing power, which requires access to ever-increasing amounts of capital. Even more, proof-of-stake is explicitly based on ownership of stakes, which represents the outcome of the very same unequally-distributed underlying dynamics. 
There are various attempts to remedy this through alternative designs of the consensus protocols or the rules of verification, but with limited success. On the contrary, Holochain reimagines distributed ledgers altogether based on principles derived from biomimicry. It fundamentally changes the dominant narrative from “trustlessness” to a “web of trust” principle: if A trusts B, and B trusts C, then trust can be ensured among all the peers. Holochain makes it possible for various context-based distributed ledgers to become interoperable and interconnected, thereby creating a universal distributed-ledger mechanism, rather than a universal ledger. 
It has therefore significantly lower requirements in energy use for verification; it is potentially more scalable at lower cost; and does not automatically create oligarchic processes. Moreover, it uses mutual credit as its main mechanism for exchange of value, and its first native token, Holo, is based on the representation of the server space made available to the system. Its Initial Community Offering had also foreseen specific measures to limit the power of big investors against smaller ones. 
Likewise, the infrastructure technology of ECSA, Gravity, provides an alternative architecture to bitcoin’s universal ledger or Ethereum’s World Computer, by offering a platform for interoperating networks of decentralized computers. The Gravity design is modular and granular, and allows more possibilities for developers to create and run applications on it, based on different properties and consensus protocols. 
ECSA thus enables a new approach for distributed ledger design. It relies on the mobilization of diverse capabilities to collectively contribute to, and maintain, the rules of cooperation in the network. It allows alternative economic spaces, with relative value sovereignty, to enforce their desired principles of cooperation and exchange, so as to devise a distributed mechanism for computer-mediated cooperative work capacities. 
Furthermore, as we argued earlier, the new forms of mutual coordination need to be integrated in shared supply chains or networks through pluralistic forms of value accounting. DAOStack is building on a legacy of related projects, such as Backfeed,17 in order to create a system of interchangeable tokens of value exchange. It is an important attempt to rethink a consistent system of value for a contribution-based economy and the rules of value circulation and governance. In a similar direction, REA represents an important shift from double-entry accounting to a network-based view which illustrates individual and collective contributions in the value flow. Finally, Guerrilla Translation's multi-flow accounting system is important for its explicit incorporation of both productive and reproductive work into the value equation. This shift beyond double-entry to a network vision of one’s activities is necessary for the transition to an economic system which is able both to account for contributory activity and to integrate externalities. 
In turn, Envienta and FabChain exemplify a potential path for this transition to take place for ecosystems of physical production. They are oriented towards the creation of cooperative ecosystems based on distributed manufacturing capacities, organized around makerspaces or Fab Labs as their innovation hubs. They emphasize the elements of openness and cooperation, keeping locally-determined socio-ecological conditions in mind, involving mutualization, circulation and reuse of resources and outputs in integrated systems. In this direction, Faircoin and Trustlines represent a potential contribution of blockchain-based systems to support the maintenance and further development of these capacities and cooperation, from a commons-oriented point of view by focusing on currencies for more fair exchange. Terra0 is of experimental interest because it can integrate non-human agency in this web of cooperation.
Regen Network presents both a vision that allows for the recognition of the value of positive generative work, and a way to structure flows of ‘circular finance.’ 
Finally, MuSIASEM and Reporting 3.0 provide the back-end layer of this process, by defining context-specific and global thresholds and allocations to assess and guide the overall sustainability of such ecosystems. They present a potential evolution in economic governance systems that are more aware and inclusive of the social and ecological aspects when it comes to informing decision-making and promoting more open and democratic approaches. They could and should evolve to fully thermodynamic accounting systems.
Production for social needs within planetary boundaries 
What we have already observed in CBPP is that it is possible to create massive and complex technological infrastructures, essentially visible for all the actors, to coordinate self-identified contributory activity. These permissionless contributions are guided within an environment of shared transparency that allows potentially anyone to understand where contribution is needed. This capacity is often referred to as “Holoptism,”18 whereas the capacity to coordinate work and production through signals is called “stigmergy,” with reference to the signalling language of social insects. In the words of Jean-Francois Noubel, we are witnessing a shift from pyramidal collective intelligence to holomidal collective intelligence.19 In other words, from competing hierarchies to cooperative networks, whis is to say, from competition between cooperating teams to collaboration, including potential competition within these collaborative frameworks and ecosystems.20 
Moreover, the sharing economy, with all its nuances and various interpretations, has demonstrated the effectiveness of large-scale allocation of idle resources through P2P signals that do not necessarily entail price signals. The sharing economy has showcased patterns to allocate massive amounts of unused capacities, from excess resource-processing power to rarely-used household appliances, in many cases more efficiently than by central planning or market operations. The internet has enabled a logic of mutualization for idle resources, which can lead to more efficient and sustainable consumption practices.
One of the common problems of CBPP has been the amount of unpaid work, because there were no easy mechanisms to recognize and reward contributions. It is in this direction that interest has been placed on distributed ledgers, insofar they can allow for large-scale integration of open and shared contributory accounting. Productive communities may, thereby, decide how to reward contributions and develop mechanisms for the recognition of multiple forms of value, thus enhancing their value sovereignty. 
Simultaneously, these instruments can also be designed to maintain more fair and just distributions of value. Accounting objects are fundamentally representations of the world of physical-social interactions. Through such accounting systems, which embed the social dynamics of CBPP, the mutual coordination practices can shift from the immaterial world of knowledge, software and design, to the direct coordination of actual physical production. In other words, it is through shared accounting and shared logistics that physical production can become stigmergic, by following the examples of the patterns of signals that already work for immaterial production.
However, physical production requires access to depletable and capital-intensive resources, where stigmergic coordination alone does not suffice. Moreover, material resources need to be exchanged or purchased, often beyond local boundaries. Until now, global supply chains have been based on market mechanisms to coordinate these exchanges. A similar function may be regulated through the exchange of crypto-tokens. The difference is that price signals alone do not necessarily reflect the social and ecological needs for sustainable allocation of resources, but merely the current tension between supply and demand. On the contrary, distributed ledgers can encode different rules into new forms of currencies whose design and supply may reflect and execute the use of certain biophysical outcomes. 
As these techno-social solutions remain at the nascent stage, market pricing is expected to remain dominant. In this process, complementary currencies can still provide new possibilities to monitor, manage and explain the flow and allocation of material resources. For instance, mutual-credit tokens reflect human contributions, or contributions by humans to an ecosystem, which may include physical resources as contributions. Their issuance and distribution is linked with the available resources among the participants of the ecosystem, including their own labor. Moreover, asset-backed tokens reflect a given state of specified resources and can be designed to reflect the usable stocks and flows, based on certain sustainability concerns. Finally, utility tokens reflect the future usage of resources, also showing future availability, which can include sustainability planning. In this context, a potentially useful concept is that of “functional governance,” i.e., a form of governance based on the direct management of matter-energy flows in a given system, including their use and exchange. 
Finally, mutual coordination may be permissionless; however, it takes place within a sphere determined by planetary boundaries which must, to a certain degree, be coercive to ensure the survival of the planet and its beings.21 These boundaries may be represented by a planning framework, determining the metabolic patterns of matter and energy for various agents on different geographical levels. It is possible to identify the amount of available resources and their respective rates of bio-circularity, i.e., the rate at which a form of certain resources remains available in the long term after each iteration of use. Subsequently, global thresholds and allocations can be determined at different levels, so that entities can operate within context-specific levels of sustainability. 
Kate Raworth in her book The Doughnut Economics (2018),22 provides a useful framework to integrate this approach (see the figure below). The outer ring of the doughnut shows the planetary boundaries that cannot be exceeded, which include vital functions for the planet, such as the nitrogen cycle. The inner ring illustrates social priorities reflecting the human and social needs that should be covered. The inner ring necessarily remains within the resource limits set by the planetary boundaries. Democratic societal institutions can set the framework for funding these priorities and allow the contributory and problem-solving communities to verify their progress and impact. This framework provides a simplified overview of a mechanism that ensures both social fairness and biophysical accountability. 

[IMG: Place Figure 8 here] 

In this context, the projects presented in Chapter 2 and 3 can be seen in various combinations as mechanisms to determine contributory activity within planetary boundaries. These mechanisms would account for social requirements and ecological capacities and allow for context-specific sustainability. Simultaneously, they would inform a global layer of thresholds and allocations, by making the information concerning their sustainability conditions universally available, while remaining locally binding. This necessitates that the relevant planning frameworks account for both mutual-coordination mechanisms and market mechanisms, eventually guiding the latter forms to shift towards the former; its feasibility will be based on the identified social needs. It nevertheless remains an agile, functional framework that would emerge from pluralistic mechanisms setting complementary and overlapping layers of biophysical rules, ideally set through participatory forms of governance. 
The above framework is summarized in the figure below, in which some of the projects presented in the previous are placed. This integrates the various combinations operating on the three layers: a) mutual coordination of contributions; b) circulation and exchange of necessary resources; and c) planning frameworks indicating limits of use. The horizontal axis represents the tension between social and ecological capacities, which include, respectively, the available human and natural resources, and their relevant regulation. The vertical axis indicates positive contributions towards the top, and thresholds and allocations that are set in place to withhold negative implications to both the social and ecological sphere. 

[IMG: Place Figure 9 here]

Contributory activity may be relevant to both social and ecological capacities. For instance, ECSA DAOstack and Guerrilla Translation can stimulate contributory activity through P2P signaling and rewards systems, while allowing for a framework determining the lowest levels of necessary social work that needs to be allocated for the production of certain goods and services. Similarly, Regen Network can stimulate positive contributions to a certain ecological state of an ecosystem by rewarding regenerative activity, while designating a lower limit for the sustainability of the given state of the ecosystem. Simultaneously, FabChain and Envienta may coordinate the circulation of resources within and across ecosystems in order to cater for the necessary social needs, while encouraging positive ecological contributions through circular economy processes. Finally, the MuSIASEM framework can provide information on both social and environmental thresholds and thus guide contributory activity in the other layers. 
Let’s use an example to better explain the above relations. The French community land trust Terre des Liens23 buys a piece of land to protect it from market speculation. They vest it in a trust and provide low-rent access for organic farmers through leases. The organic activity that takes place on this piece of land creates different types of positive externalities. For instance, the much lower (if not zero) use of pesticides contributes to the quality improvement of the local water horizon, which leads to lower depollution costs for the local public authorities and their water agencies. Simultaneously, it also incrementally benefits the health of the local population through the provision of organic food, thus reducing health-related costs in the long term.24 
This means that both the state and the public are benefiting, but there is no mechanism to calculate the return, at least partially, of this investment. There are no financial means at hand to facilitate this transition towards more ecological and healthy models. Terre des Liens does not get rewarded for its generative activities and the positive externalities it creates, while the farmers and agribusiness that actively degenerate the quality of the soils and waters are rewarded by market income and state subsidies. There may be incentive mechanisms in place to motivate the adoption of less intensive and more environmentally-friendly farming techniques, but those mechanisms nonetheless fail to acknowledge and tackle the very foundations of an overall degenerative model of intensive agriculture. This is a clear illustration of the major weakness of the current system which rewards extractive activities, but not generative ones. 
A potential solution can be provided by finance schemes, engaging stakeholders from state, private and civic entities, that acknowledge and reward these positive externalities. For instance, the official water agency, which can potentially save substantial funds from depollution expenditures, would agree to finance Terre de Liens, and any other actor achieving the same effects, in proportion to what it saves. Ecological State Protocols, based on the model of Regen Network, could be instituted to verify and log the ecological status of this particular piece of land and record its improvement. Positive results, such as lower carbon emissions, increased biodiversity, improved food quality, and higher degree of social inclusion through the provision of employment, could be coupled with the issuance of tokens. This way, a mechanism can be developed through which the verified savings of the agency could be used to buy-back the tokens, thereby initiating a virtuous cycle towards generative activity. We could call these sets of mechanisms “circular finance,” as they reflect the necessary circularity of the physical economy. 
Moreover, this scenario has arguably further advantages. It could be extended to an alternative scheme of competitive bidding for public procurement by the state agencies. For example, a general permissionless mechanism for regenerative contributions can be set up and guide multi-stakeholder forms of public-private and public-commons partnerships. This process can be further expanded to fund different forms of ecological and social outcomes. We are describing a mechanism that links permissionless contributions with income-generating market operations and which, instead of financializing nature, rewards regenerative work and contributions. It also provides a more integrated approach to replace or complement competitive bidding for narrowly-defined impact bonds, which may reduce certain externalities but create others, since competition on pricing by for-profit firms rewards those that succeed in externalizing other effects. 
In conclusion, we have described here a new type of economy that is defined by:
    1) an increasing importance of free (as in freedom) forms of mutual coordination mechanisms, enabled through shared infrastructures; 
    2) a sphere of circulation and exchange of matter and energy flows, informed by monetary signals which are connected to social and ecological constraints; and 
    3) a layer of planning frameworks determining biophysical thresholds and allocations. 
It will perhaps be clear how this ‘triarchy’ also fits with our analysis of the forces at work in peer production, as well as our proposed model for a P2P society.
In short, the peer production communities practice contributory production through free mutual coordination. This illustrates a tentative social model where citizens participate freely in the commons of their choice as a means to build their identities, obtain recognition and participate in the efforts for the common good. In order to make a living from their contributions, peer producers, i.e., commoners, join an ethical and generative market sphere. In this sphere of the generative market, goods and services may be exchanged, but in a way that strengthens the commoners and their commons. 
Finally, the ‘commons of the commons’ is the sphere of the common good proper, which requires the management and maintenance of all the common resources needed for societal life: this is the sphere of ‘planning’ and framework setting, in other words, here the broader rules and regulations are determined, so that the contributions and exchange can go on without upsetting the broader natural and social environment.
We move from a market society with a subservient state and weak and unproductive civil society (considered so because the non-market production of value remains unrecognized, i.e., the current Capital-State-Nation triarchy) to a new configuration where the commons of contributions is central, as a global interconnected network of productive and civic communities at various scales. This configuration is also surrounded and maintained by a regenerative market sphere. Finally, it is broadly regulated by a Partner State that enables personal and social autonomy while setting the boundaries in which free association can occur. This is achieved by protecting the limits needed for the common good of all humanity and other beings through a Commons - Generative Market - Partner State configuration.
This report has been a description of the kind of techno-social infrastructure that can facilitate this shift or transition.
Our contention is that many of the tools for setting up this configuration are already available or in the process of development and prototyping. However, in terms of a fully integrated ecosystem these attempts are currently fragmented and to a large extent still immature. On the positive side, the potential of the necessary technologies for more sustainable production has been identified and an increasing number of projects are investing in this direction. Even though there is a lack of alignment with regards to a shared socio-political vision, a few of the key actors are taking a more holistic view at the systemic level. 
At any rate, we cannot of course suggest that the above framework is definitive or that it can include all the possible relevant scenarios in a vastly complex social and economic reality. It may, though, provide a useful basis for guiding technological design, especially in the domain of distributed ledgers and accounting tools. Furthermore, it may serve as the common ground to develop a more integrated vision to bring the various fragmented projects in alignment.