Peer production is a model of social production with two core principles: (1) decentralization and (2) motivation by social cues and intrinsic motivations rather than prices or commands. This model is possible when society has widely distributed physical capital or tools (e.g., computers) and when its members are motivated by much more varied reasons than just pure personal wealth maximization.

Contributors often identify a variety of motivations: the pure pleasure of creation, a sense of purpose, companionship, social relationships, and more. But the essential feature of these contributors are volunteerism and self-selection -- the virtue of "liberation". In the context of modern society, this could mean independence from commercial and mass-production values, as well as from institutional control.

"directing their own lives, ... deciding for themselves the conditions of their own existence, as against falling prey to the domination of others" -- Charles Taylor

(See also: Convivial Society Enables People to Shape Their Own Environment )

However, peer production is not suitable for every type of product. For this mode of production to work effectively, three structural properties are required:

1. The product must be modular.
2. The modules must have fine granularity, allowing individuals to make meaningful contributions without requiring a large time commitment.
3. The cost of integrating the modules must be low.

The best examples of commons-based peer production are open-source software projects. One thing I find particularly interesting is that contributors collectively agree not to exclude anyone—including those who do not contribute—from using the software.

References

• Commons-based Peer Production and Virtue (2006) by Yochai Benkler