Distributed Market Substitution

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Introduction

Distributed Market Substition (DMS) is an essential outcome of the Open Source Economy. It is a condition in the economy marked by distribution of production to a scale that can be engaged efficiently and effectively within a framework of open, collaborative product design. The intended result is the leveling of the economic playing field to solve for the equitable distribution of wealth in society. This is a meritocratic value chain (as opposed to monopoly, totalitarian, terrorist, welfare, kleptocratic, etc state) where value can be produced without barriers to entry - with only one's self-actualization as the guiding light. The assumption here is one of abundant renewable energy, a condition that is met at the current Kardashev Scale rating of Earth.

A condition whereby full open-sourcing of a product and its enterprise infrastructure results in substitution of centralized, proprietary production with distributed, open source, flexible, small enterprise for any given sector or product in the maintstream economy, paving the way for a distributed, open economic organization as the new model of the human enterprise. The products that this applies to are diverse - in that this may apply to product development in the standard sense - but in OSE's sense - it also includes product ecosystems such as governance systems, institutions, natural life support systems, R&D efforts, and any other enterprises. For example - this could apply to replacing authoritarianism with democratic governance as a large BHAG product ecosystem. This may be in the form of a Network State, except with a focus on open collaborative economic development.

But to what level? We can probably say becoming the single largest enterprise in that space. Not centralized - but via distributed production in franchise-like open business models. If the space is not a monopoly, then the fraction of overall production can be small. However, given the proof that DMS succeeded, it is likely that further substitution will occur simply based on the increased value proposition of the more equitable route. Ie - we claim that product optimization leads to the largest market share. Certain large corporations today have large market shares, but not with optimal products. We believe that optimal products can come to life only via collaborative, open development. See Optimal Economy.

The goal is to regenerate society from a military to a peace-time economy. Currently, there is a disconnection between humans and their environment, and this disconnect is both a symptom and a cause of ongoing ecocide. Both the military economy and environmental destruction are driven by fears of survival - which go back to material security of civilization - and to the reptilian brain which is overdue for a software update.

Solving material security is a central theme of Open Source Ecology's work, up to the point of solving this issue within 1-2 decades as of 2019.

How does one justify the grand connection between ecocide and human rights issues - and the distributed economy? It is that by creating a distributed economy, we create an agile and adaptable system that strives for a balance between human activity and natural life support systems. See more about this topic at How Economic Localization Can Be the Greatest Measure for Safeguarding the Environment

The key enabling point for modern economic transformation is the emergence of open source hardware. Open source affords unprecedented efficiencies that are not possible in traditional business models - due to the inefficiencies of Competitive Waste. The difficulty is actually societal, not technical - as a transition beyond a scarcity mindset to a growth mindset is necessary.

However, the issue is that open source hardware has failed to get meaningful traction within the global economy to date.

OSE's proposed solution is the obvious concept of distributing production via open source hardware and enterprise.

The idea is to distribute wealth more equitably by enabling enterise to be more distributed, bringing wealth back to communities as opposed to being highly centralized. This can happen for most of light manufacturing, as well as a significant fraction of the primary sector + heavy industry - such as Solar Steel, Solar Concrete, or Solar Hydrogen. OSE is working on demonstrating this feasibility. Light manufacturing can happen in various Universal Basic Assets-producing facilities such as solar microfactories. Local materials can be extracted using the processes of chemistry, a well developed art in civilization which unfortunately remains a mystery to the population due to its Scientific Illiteracy.

The idea is that as barriers to entry are lowered, and product design is designed-for-flexible-fabrication in open source microfactories. To lower entry barriers, productization and marketing capacity is developed to assist in distributed production. If these capacities are developed, then a 1000x or more wider production of the specific good can occur. The logic behind this is that the most robust production is local production, as it creates unjobs in a decentralized + distributed scenario. The incentive behind this is enterprise startup in communities. This can happen as open design becomes available - as open source microfactory technology becomes available - and barriers to entry are lowered - such that the value chain shifts to efficiency (no competitive waste, no transportation, local and recycled materials). It is theorized here that global supply chains cannot compete with truly efficient local production because local production enables improved lifecycle stewardhip.

War and Peace

Added 6/24

As global resource conflicts rage on, the connection of DMS to world peace must be established.

DMS means that production has transitioned into the hands of open source, collaborative agents. Such individuals are assumed to have a high level of Moral Intelligence, which is the essence of open, collaborative culture. With Such intelligence in place, the economic agents are now able to negotiate properly with pariah states, regardless of government policy. Sanctions.are enforced by by the economic agents, regardless of policy. The decision is made lower in the chain of global command - in the hands of responsible.stewards. thus, evil empires can be banished for.the first time. The only way that evil empires, such as Russia or North Korea - survive - is by trade with assholes who do not subscribe to sanctions. Removed from such assistance - the belligerents must submit to a rules-based word order instead of their proposed anarchy.

This is simply a case for defunding any illicit or undemocratic global activity

For this reason, DMS is not a hippy ideal - but a moral imperative of one is interested in world peace. Therefore, OSE proposes that any Global Steward take on a part in DMS. This applies especially to 'strategic' production such as energy and semiconductors - but also to common goods such as homes or consumer goods. Because if there is security in basic goods, there is a foundation for acting without fear of survival.

In sum - if resource conflicts bother you - subscribe to and engage in DMS as a way to sublimate the entire issue. Yes, it is a fundamental shift - it is up to responsible individuals to make it happen.

This is the ultimate in responsibility or global stewardship that anyone can take on. Not only does this secure for a region the basic goods and services for prosperity - but it also frees us from a weak negotiating position with assholes.

This should not be confused with isolationism. This is global collaboration to the max, as DMS relies on open, collaborative design. And then why would the pariah state not subvert this? They could, if they subscribe to open collaboration. Such a shift would be a positive strep that can assist the pariah state in joining the global community as a friend,.not foe. This is just an affordable of open collaboration. But that means that it starts at home - we must fix our own backyards because the 'weayern.democracies' are not open-collaborative. They too are stuck in proprietary, non-collaborative violence and comfortable unfreedom. Not as bad as the pure evil empires, but to a smaller extent.

OSE Milestones

  • First, that DSM is possible, in the form of The Economic Advantage of Open - 10 years to 80% market share of an entire industry, worldwide. Not monopoly, as the enterprises are franchises and their replicas, seeded by OSE, and brought to fruition independently. OSE's role is to demonstrate a robust proof of enterprise, including replication/ Integrated Education, iEnterprise, iDesign.
  • Second, that a DMS enterprise offers 30% cost reduction over industry standards. This comes from eliminating finance capital and various intermediaries who are typical aspects of scarcity-based business models. If this also includes Technological Recursion, that involves 20% further value capture per Recursion level. Recursiin levels can likely stack to tooling, then materials, so that we go from 30% to 50 to 70% economic advantage of open. Thus, starting at 30% lower cost, we are likely to attain 80% market share. How do you get 10X performance from 30% lower cost? By including all aspects of Robustification and quality afforded by a distributive enterprise paradigm.
  • This is still consistent with 20% net going to management,and 80% workers.

End State

The end state is defined as maximum benefit for the largest number of people. Ie, distribution of production should occur to the point which leads to the highest level of self-determination for people. The scale at which this occurs should be studied to determine the optimal balance between the circular economy, imports, and Import Substitution via Technological Recursion.

The philosophy here is Self-Determination as an ingredient of unleashed collaboration in a collaborative economy beyond competitive waste. The clarity here is that competition produces overwhelming competitive waste - energy which would otherwise be used for collaboration. Many people think that competition drives people to better results, but this is controversial. OSE assumes that the economic effectiveness of competition is inferior to collaboration, when greater societal benefit is concerned.

Test Case

OSE plans to launch a test case of the above with a $250k incentive challenge to bring a 3D printed, professional grade, open source cordless drill to the world - build from waste plastic using plastic recycling infrastructure and 3D printing. The explicit goal is to convert a $10B cordless drill market from centralized to distributed production within 3 years.

That was the intoal idea from around 2019. Since then, we think that the minimum collaborative infrastructure to achieve this would be more like $4M for 10 full time staff working for 2 years: 5 machine designers, 2 system architects, 3 builders, supported by performance marketing and communications, organizational staff, programmers, and more support staff, collaborating with orgs such as HeroX, KS, and Crowd Supply.

However, in 2022 OSE is ending up with the Seed Eco-Home 2 as it's test bed for Distributed Market Substitution with the performance of open collaboration subsuming scarcity-based business models which simply cannot compete with collaborative, open development.

Properties

  • Optimized products with high sophistication in modular design, lifetime design, and excellent user interface. The user interface includes the choice to maintain the product for a lifetime - in which aspect Job's later designs do not compete.
  • Enterprisable. Open enterprise blueprints encourage anyone to replicate. This allows for leveling of the playing field, and this is a prerequisite for eradicating artificial scarcity in that product.

Examples

  • These are just one of thousands of examples that can lend themselves to distribution via existing, open source digital technologies: *Shoes. Global supply chain of shoes ($300B market) can be substituted at scale by 300,000 local brands worldwide producing 3D printed or otherwise open source shoes using best practices gathered via open collaboration, each running a $1M/year operation.
  • Cordless drills - If the numbers grow to thousands of producers worldwide - then we have probably achieved Distributed Market Substitution of the $10B cordless drill industry, which appears to produce around 100M cordless drills per year ify an average drill costs $100. But we would need to produce 10x fewer drills, as the open source version would last 10x longer. That gets us down to 10M drills per year. 10,000 producers would need to produce 1000 drills each per year to meet this quota. That sounds about right: 100 drills per month in a garage-scale workshop. And there are about 5000 cities with populations over 150,000. [1] - so about 1 cordless drill enterprise per city worldwide.

Links

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