Economics Of Abundance Getting Some Well Deserved Attention

from the about-time dept

It's great to see Chris Anderson getting lots of attention for his recent talk on "the economics of abundance," because it's exactly the type of thing that a lot of people have been discussing for a while -- but still hasn't permeated the mainstream. In fact, it's quite similar to the talk I gave at the Cato Institute back in April in discussing why certain people seemed to have so much trouble grasping the economics of the digital age. Basically, it's the problem that occurs when people focus too hard on the idea that economics is the study of resource allocation in the presence of scarcity. That only makes sense when there's scarcity -- and in digital goods, scarcity doesn't exist.

Dave Hornik has a wonderful post about Anderson's talk while Ross Mayfield is also discussing how he's come to realize that the economics of scarcity doesn't apply digitally. Now, if we stuck with the focus on "scarcity," then I should be upset that these two are basically repeating the "idea" I discussed back in April. Those who keep harping on the importance of "property" and love to say that you can "steal" content might even say that this idea was "stolen." That, obviously, is ridiculous. These are basic ideas that we have all realized is fundamental and a truth of economics. And, it's hardly a new idea (which is why my one quibble with Anderson's own post is his decision to call the idea of the economics of abundance a "radical attack"). Mayfield talks about those who helped him realize it, from Jerry Michalski to Howard Rheingold. In the comments to that post, Julian Bond brings up the ideas of Buckminster Fuller and and Alan Cooper. In my case, the inspiration came from many different people, including the teachings of Alan McAdams (my old mentor and professor) and the writings of Brian Arthur (who focused on "increasing marginal returns" rather than diminishing ones) and even back to Thomas Jefferson, who famously said:
If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.

That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

So, no, it's not a new idea at all -- and yet, many people still don't seem to want to understand it. They don't believe that the free market can function with a lack of scarcity. It's understandable why that could make some uncomfortable -- but, it's a fundamental misunderstanding based on this desire to force scarcity where there is none, just so economics can continue to be the study of scarcity. It's this inability to get rid of that scarcity thinking that's holding back a number of developments these days, and the more people who realize this and the more people talking about this, the better. And it is fitting with the theory of abundance. The more abundant this discussion is, the more likely people will grasp it. And, it's especially exciting that someone like Chris Anderson is pitching it, because of his ability to take complex economic ideas and make them easy to understand, while getting people to listen. Hopefully, this is just the beginning of a widespread discussion about this topic.

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  1. identicon
    Codeye, 7 Mar 2008 @ 9:09pm

    Re: Infinte? No?

    It seems that for us humans to understand anything fully we must eradicate the 'middle ground'. That grey, fuzzy, unclear area which is neither wholly black nor wholly white just attracts us back repeatedly until, finally, we manage to (mis-)categorise it in one box or the other. Michael demonstrates this perfectly in post #13.

    The problems arising from this are then numerous. Apart from the fact that once we have categorised something as subjectively 'good' or 'bad', we really don't like to change our minds and re-categorise, even in the face of overwhelming evidence sometimes, there is also the fact that though we now call it 'black' (or 'white'), grey actually does still exist.

    It's not 'all or nothing'. It never was. The choice we are faced with is not 'keep the status quo or threaten the diversity of production'.
    Take music as an example. If epic, or sony or any other of the big (multi-national, multi-continental) producers of music stopped paying quite so much to their top 'stars', it would not 'kill off' the music industry.
    Quite the opposite, in fact, as there would be more money left 'in the pot', however finite the pot, for more artists to share - increasing the plurality of voices and meaning that there is a REAL chance of any aspiring musicians 'making it big'. This in turn attracts more would-be musicians etc etc.

    Aside even from that point, the 'arts' are practised to amazing levels for free by a majority of people. In choirs and orchestras, through am-dram groups, poetry recitals, open-mic spots, sports teams, motor sports etc, people are not only willing to devote their time and energies for nothing, but will actively PAY to do so!
    The point here is that the 'scarcity' paradigm 'they' fight so hard to propagate does not actually exist. If every musician actually had a realistic chance of producing an album, many more would actually become 'good enough' to be released. There are already millions of fantastic amateur musicians who'd jump at the chance to release their own music - myself included.

    There COULD be an 'infinite' supply of 'good' (subjective terminology is yet more 'grey avoidance' there; what's 'good' to you isn't necessarily 'good' to me) music, books and movies! The problem isn't with scarcity of money, talent or time.
    The issue is actually one of abject greed, alongside damned good marketing and a near-stranglehold on the sources surrounding the music biz.
    Example - if we want to copy a Sony artist's cd, we must buy a (sony?) pc or laptop. We'd also need a (sony?) cd writer, some blank (sony?) discs or some other form of media (sony walkman?)to store it on. We could call a friend from our (Sony?) mobile phone to tell them about the artist. Our friend could listen to the charts on their (sony?) radio to hear our artist, but the song will only be in the charts if the artist has had enough radio airplay in the first place. The (sony?) tv is another place to look, but the tv music channels are all owned by producers of music (like sony). Even the software used to create the music in the first place and play it out over the airwaves (Sony Fruity loops, Sony cool edit pro etc ) has been bought out. The cameras at the tv stations are made by Sony, as are the headphones, earpieces, mikes etc ad infinitum!
    The few producers currently only pay a tiny minority of their huge profits to the recording artists anyhow. Multiplicity and diversity scare these suppliers because they assume it would inevitably put a dent into their over-inflated income - except that of course in the real world it wouldn't! If Britney Spears hadn't been hand-picked as the 'face' to launch that music/those products etc, and instead the 1% she got went to 20 different bands, there would be a larger target audience resulting in more sales overall!

    There will always be people performing music for free. Buskers do it for a small donation, yet we don't think of the few pence given to him as being opportunity cost which therefore stops us buying cd's! More 'fresh' money is instead poured into the market..

    If nothing else convinces you, compare books to cd's for a moment. Where would the world be if it were not for libraries? Authors do not - cannot - prevent 'their' book being 'shared' in almost every town and city in the western world. Yet we still buy millions of books, the same books we could read for free time and time again if we wished!

    Finally, it's a mistake to think that NEW ideas, or ideas which extend or stretch existing businesses or whatever, are either "a dime a dozen" or "overpriced at that". (Or to think that something requires tens of millions of dollars to be spent in order for it to be worthwhile.)
    Bottled water makes millions of pounds worth of sales in the UK every day, despite the fact that our tapwater is among the best, cleanest and safest in the world, AND the fact that we have already PAID the water companies well for that privilege!
    Clever extension of an existing idea, now worth billions. The man who thought of it almost certainly does not own the companies that make the money (coke, pepsico etc who 'own' most of our big producers of bottled water) but again, that's actually a good thing!

    Hope I've not been too guilty of repeating what's already been said - I never meant to steal your ideas!!
    Codeye

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