Contributionism - An economic model for organisations, an alternative to capitalism

[lovegrovegeorge]

Contributionism is an economic model built around contribution. A public good I’ve been working on recently

Contributionism focuses on the organisation and how they are owned, governed and incentivised.

Contributionism represents an alternative to capitalism.

Critiques of capitalism

Capitalism is one of the most widely adopted models for structuring organisations across the world.

Capitalism is often associated with a number of economic structures and ideas such as free markets, business, private property, profit motives and wealth accumulation amongst others.

Capitalism is not required for any of these structures or ideas. They could exist and be broadly adopted in other economies that adopt different approaches for structuring the organisation.

Capitalism is focussed on the organisation. Capitalism adopts a share based ownership structure that influences how organisations are owned, governed and incentivised.

A number of critiques can be made about how capitalism structures organisations:

• Flawed justifications for unfair contribution treatment - Earlier contributions are excessively rewarded at the expense of future contributions. Commonly used reasons to justify this excessive reward are not fairly justified.
• Contributions are not respected - Contributions do not need to be respected under capitalism. The common purpose of a capitalist organisation is to maximise shareholder value. Capitalism often leads to a disconnect between contributions and ownership, governance and incentives.
• Flawed share governance and incentive rights - Perpetual governance and incentive rights are a flawed approach that is commonly adopted with shares of ownership. This structure commonly leads to excessive compensation for earlier contributions at the expense of future contributions.
• Fair compensation often requires ongoing gestures of goodwill - Maximising shareholder value can lead to environments where labour is exploited. Workers are often constantly reliant on the goodwill gestures of owners to not exploit their contributions.
• Risk of stagnant ownership and leadership that isn’t collectively accepted - Capitalism can result in stagnant ownership and leadership. Leadership might not be collectively accepted by the contributors involved in the organisation.
• Risk of motive, priority and incentive misalignment - The motives, priorities and incentives of capitalist owners and leadership can become increasingly misaligned with workers.
• Excessive competition - Capitalism incentivises excessive amounts of competition due to the perpetual need for workers to create their own organisations if they want to be fairly rewarded for their contributions.
• Equal opportunity and meritocratic fallacies - Capitalism does not commonly result in meritocratic organisations. Capitalism does not create economies that have equal opportunity.

Capitalism is often rightly criticised for serving the interests of the few and for increasing the amount of inequality across society.

When you review how ownership, governance and incentives are handled under capitalism, you can more easily see how a capitalist structure can lead to these undesirable outcomes.

Capitalism was never properly designed to fairly reward and respect all of the contributions that people make towards an organisation.

Instead, capitalism creates a structure that incentivises the exploitation of future contributions and creates an environment where this exploitation can more easily occur.

Contributionism, an alternative approach

Contributionism looks to resolve the issues that are commonly found in capitalist organisations.

A number of contributions are important to an organisation. These contributions include labour, capital, consumption or donations.

The economic model for contributionism includes 7 key principles that organisations should follow to improve how they are owned, governed and incentivised.

The 7 principles of contributionism include:

• Respect contribution - All contributions should be respected.
• Contributor & public ownership - Organisations should be contributor owned or publicly owned.
• Contributor governed - All organisations are contributor governed.
• Temporary governance rights - Temporary governance rights should be given to all contributions that match the contribution ownership type.
• Temporary incentives rights - Contributions should receive temporary incentive rights so that contributors can benefit from the full value of their contributions.
• Transparent priorities - Priorities should be transparent so that people can contribute towards organisations that they are aligned with.
• Collectively accepted leadership - Leadership should be collectively accepted.

There is a massive opportunity to create organisations with better aligned incentives that fairly respect and reward all contributions that get made towards an organisation.

To properly respect contribution in any organisation, we’ll need to collectively keep getting better at understanding and rewarding contribution.

Contributionism is only interested in broadly defining the most important principles that organisations should follow.

Beyond these initial principles, it is up to the contributors involved in an organisation to decide how they want to operate.

Each organisation could be operated in a large variety of ways. The purpose of contributionism is to suggest the structures for ownership, governance and incentives that should lead to positive outcomes for all the contributors involved in the organisation.

Contributors should feel confident that if they maximise their contribution efforts to generate value and impact that their contributions will be respected and fairly rewarded.

Contributions are the foundation of any economy. Contributionism helps to ensure that contributions are the beating heart of every organisation.

Why is this relevant for Gitcoin, as well as the wider Ethereum ecosystem

Contributionism could represent one of the go to models for thinking about how organisations and DAO’s structure themselves in Web3.

Contributionism is solely focussed on how organisations handle ownership, governance and incentives.

The ideas suggested in contributionism should become increasingly relevant for the growing number of organisations that are being started across the Web3 industry.

This economic model was started by outlining some of the fundamental principles that can be recommended to organisations to consider and adopt.

We’re looking to gather feedback to refine and improve upon the current foundations with further analysis and resources.

After that we’ll explore approaches that could be adopted under this model and look at what tools and systems could be developed and used to experiment with this model across Web3 ecosystems and potentially elsewhere.

Next steps for contributionism

Contributionism is being shared widely to everyone that might be interested in giving their thoughts and feedback about the model.

If you know of any existing efforts that might be related and relevant to this initiative then please do share them in the comments.

Right now our focus is just to raise awareness about these ideas and listen to any feedback that people might have!

You can find our Twitter and Telegram on the contributionism website if you wanted to reach out and discuss anything directly.

[Kronosapiens]

Would encourage you to check out Ellie Rennie’s ethnography of SourceCred, an early contributions system. Really interested analysis and discussion.

The CredSperiment: An Ethnography of a Contributions System

[owocki]

really great to see this post @lovegrovegeorge

im super passionate about taking the field of onchain capital allocation and bringing it into practice these days. i wonder if we could figure out a MVP onchain resource distribution tool / pilot of contributionism and put it into practice.

[lovegrovegeorge]

Thanks for sharing, this analysis of SourceCred is great, I was following SourceCred a fair bit years ago when it was more active. SourceCred definitely made its mark in the space as a lot of people seem to know about it and have looked into it themselves when I talk to different people. Was a big fan of what they were working on as been thinking about this area for a fairly long time now.

The big issue I saw with the approach was the granularity of trying to value contributions with the point system. It was jumping into the deep end for recording and evaluating contributions. You needed pretty sophisticated tools and accuracy to get this to work. There isn’t a huge problem with using annual salaries and bonus based compensation, this is the approach I would start with as it is a drastically simpler model.

I do monthly contribution logs for my own analysis work and I only spend 10-30 minutes on writing this out each month - Contribution logs | Web3 Association. I think it’s super important that these processes for recording contributions are not time consuming as the cost and reluctance to adopt the tools becomes too high for the benefit you get back.

I think the starting point for getting better with understanding contributions is to do what companies already do at the moment which is often something like peer to peer evaluation in a team based setting, where people are aware of what everyone has been working on as they collaborate together. Then you introduce contribution recording tools to properly record and structure the information and then on from this you get better at presenting the information. The aim is to not to force the worker to do much work to record their contributions and capture all the digital automated contributions first. This should then make it easier to reference things when you’re doing peer evaluations.

After that you start building up data to analyse peoples contributions and can look at how you could try to evaluate them or pull out more insightful information e.g. 30% of Bobs code is novel and isn’t found elsewhere on the internet. You could start to pull out more factual and useful information that makes it easier for people to understand and evaluate how difficult or useful certain contributions are when compared to others. You just turbo charge a process they are doing already until it becomes a big factor in how accurate they can evaluate someones work.

The better the systems get at understanding and comparing contributions the easier it will become to make more competitive environments as people will more easily and accurately be able to work out how peoples contributions compare against others. Third party referees might be needed for ultra competitive environments but these tools would make it easier for a fairly accurate outcome to be achieved.

A distinction I think that is worth mentioning is that you don’t need to achieve an actual value for how much someones contribution is worth. You only really need to be able to compare peoples contributions within the team to judge who proportionally contributed what towards generating the current outcomes. Project to project the amount of compensation people will receive could obviously differ a fair amount.

[lovegrovegeorge]

Been following your content for a good while already Kevin! And been through the onchain capital allocation books Whoever is doing the design for your content always does an incredible job!

In regards to making an MVP, the goal of the contributionism model is mostly aimed at outlining the fundamental problems with capitalism and what lessons can be turned into principles/rules/policies about how to operate an organisation that is fair and well aligned for everyone involved.

There is a really broad number of ways an organisation could operate and still comply with the principles from contributionism, such as an ultra competitive startup where everyone is paid proportionally based on their value to a much more cooperative one person one vote approach startup where the team value things more highly than compensation.

I’ve had some good feedback already on contributionism to make some improvements but I actually found a more compelling area to work on in the short term.

I do want to start experiments with contributionism in the future but I think focussing on some analysis for money could be more impactful in the short term. Money is one of the most important areas to get right in Web3 and I have recently learned about Silvio Gesell and his arguments for demurrage. Fantastic course here - Video Course | Silvio Gesell Foundation. Pretty sure i’ve seen Vitalik mention things like demurrage before.

Gesell argues that the store of value property for money is at odds with the medium of exchange property. The store of value property is a counter productive property for money. We actually see the live reality of this with Bitcoin, long term hodling and limited transactions, which creates a limited amount of fees for the network. A terrible outcome for a network that relies on paying its validators for security! The bitcoin network could become increasingly unstable after each halving due to decreased budget for security coupled with the incentive for people to transact elsewhere where its cheaper (wrapped coins, layer 2’s).

The opportunity to fund Web3 treasuries via a wealth tax (simulating demurrage) is highly compelling as you improve the property of money by making it a better medium of exchange and also get treasury funding in perpetuity. I am doubling down on this area and will have some analysis out in the coming months. Ridiculous opportunity for the industry, coupled with a creating a good funding process which is what I’ve historically been analysing for a while - https://funding.treasuries.co.

Looking forward to sharing some more analysis and ideas around this soon I’m always available to chat about anything contributionism or Gesell if anyone is interested, I’ve started to collaborate with Josh from the Silvio Gesell foundation (https://silviogesell.com/) around this area of analysis.