The Handbook of Peer Production

One of the critical elements enabling this type of business model was the development of networked communication technologies, which could be put into the service of capital. It was during this time that information and communication technologies became viewed as a new vehicle for reinvigorating capital accumulation, and the sector saw massive capital investment, especially in the 1990s, while US manufacturing remained stagnant. Indeed, the massive surge in venture capital investment into the so‐called “dot‐com” companies during the 1990s fueled the financial bubble that eventually burst in the early 2000s (Cassidy, 2002). The investment in digital technologies continues today, as similar investments can be seen in a number of digital services that promise to reinvigorate capital accumulation, whether they are digital platforms like Uber, Lyft, Spotify, or cryptocurrency technologies like Blockchain.

Accompanying these economic changes was also an ideological shift, particularly in the ways in which participation in capitalism was justified. Boltanski and Chiapello (2005) refer to the “spirit of capitalism” as the “ideology that justifies engagement in capitalism” (p. 8). They argue that the spirit of capitalism shifted from the 1970s onwards. During this time, business culture – in the form of management texts – began to abandon the rigidities of hierarchical Fordist production in favor of flexible and network‐based forms of organization. In doing so, capitalism effectively assimilated the artistic critique of capitalism of the 1960s and 1970s by touting individual autonomy and emphasizing employee initiative as a path to self‐fulfillment, whilst marginalizing its social critique, embodied in trade unions and more concerned with wage inequality. In short, employment was not simply something necessary for earning a living, but it was also a way to achieve creative freedom through self‐expression. The espousal of these new forms of freedom and autonomy for workers proved to be an effective way of reducing the fixed costs of corporations. As more workers embraced flexible work routines, they carried the burden of funding their own benefits like insurance, retirement plans, etc. Indeed, this trend can also be viewed today in a number of industries where freelance work has become prevalent, but the trend is particularly pronounced in the media and journalism industries as well as so‐called “creative” industries that employ artists, fashion designers, and stylists (see Deuze, 2007; McRobbie, 2016; Cohen, 2016).

The structural changes of capitalism throughout the 20th century laid the foundation for the emergence of the Internet as a vehicle for intensifying capital accumulation. Furthermore, this process really began to ramp up toward the end of the 20th century when Internet service provision was privatized. In the wake of its privatization, Internet‐ and web‐based businesses went through a relatively rapid boom‐and‐bust cycle. While these years were somewhat tumultuous for speculative financial capital, the general tendency to network the world continues, as more and more people, places, and things become interconnected through digital technologies. In what follows, I focus on how the Internet transformed from a publicly funded research and development project to an unprecedented instrument for capital accumulation.

We can begin by looking at the development of the Internet and its various iterations before it was privatized in the 1990s. Early research and development into a distributed network architecture was funded by the Defense Advanced Research Projects Agency (DARPA) in the United States. Established primarily to meet the needs of military demands, the development of DARPANET provided the initial architecture for what would eventually become the Internet in the United States. However, the network passed through various changes, including both ARPANET, MILNET (for military sites), and NSFNET, named after the National Science Foundation, which administered the network until 1995 (see Abbate, 1999). These iterations of the early Internet were funded directly by public money through the Department of Defense and were designed to serve two essential functions. On the one hand, military sites could be linked through MILNET, while ARPANET linked various civilian research communities so they could share information freely with one another. The latter function was achieved through NSFNET’s Acceptable Use Policy (AUP), which ensured that the network was used for non‐profit research and educational purposes while also prohibiting most commercial use. The policy remained in effect until the early 1990s, at which point commercial Internet service providers were allowed onto the network. In other words, one of the foundational principles of the early Internet was that information on the network ought to be freely available to others. This same principle is also identified as one of the tenets of the “hacker ethic” as defined by Levy (2010). The privatization of the Internet culminated in 1994 after a contentious hearing before the US Congress where the decision was made to relinquish public control of the network to commercial providers.

The privatization of Internet service provision dramatically increased Internet connectivity throughout the 1990s as more and more people migrated online. In response, businesses sought to take advantage of the growing market for Internet services and web‐based business models. Companies like America Online thrived in the market for Internet service provision, while the online marketplace eBay was founded in 1995. The introduction that year of the https protocol enabled secure financial dealings so that sellers like Amazon and services like eBay became the dominant business model of the “Web 1.0” era, which was aimed at providing content to consumers on web pages or selling web‐based products or services directly to consumers. Meanwhile, Microsoft dominated the market for Internet browsers by negotiating a partnership with IBM, whereby IBM’s personal computers would come pre‐packaged with Microsoft’s Internet Explorer installed on IBM’s hardware. Microsoft exemplified the power of companies during this era by developing and selling software either directly to consumers or to original equipment manufacturers (OEMs) like IBM. Since IBM dominated the market for personal computers, as well as computers sold to other enterprises, Microsoft effectively prohibited any competitor from mounting a challenge to its monopolistic position, especially in the market for Internet browsers. Indeed, it was Microsoft’s agreement with IBM that eventually led to its conviction for antitrust violations in 2001 after the United States Department of Justice found the company guilty of anticompetitive market behaviors (see The United States v. Microsoft, 2001). The Microsoft antitrust conviction coincided with the bursting of the dot‐com bubble, which began roughly in early 2000 and lasted through the end of 2002. On the day that the Microsoft antitrust decision was announced, the NASDAQ stock exchange lost approximately 8% of its total value and Microsoft alone lost nearly $80 billion of its market value (Ulick, 2000). From its peak in March, 2000 to its trough in October, 2002, the NASDAQ lost nearly $5 trillion in value (Gaither & Chmielewski, 2006).

Emerging out of the dot‐com crash came a reinvention in the way web‐based business would be conducted. Companies began to abandon old business models aimed at selling products and services directly to consumers. Instead, the consumers, or data and information about consumers, became the primary products of the emergent “Web 2.0” economy – a term coined by Tim O’Reilly (2005) – which, among other things, was characterized by providing interactive services to users so user‐generated content could be monetized by the platforms upon which those users interacted. It was within this context that we saw the rise of Facebook, Google, Wikipedia, and even the transformation of Amazon from simply a book‐selling company in the 1990s to one that began offering Amazon Web Services in 2002. This transformation in business models had dramatic consequences for social life, which is increasingly mediated by digital technologies. Ursula Huws (2014) summarizes this succinctly: