Say That Again

by Mike Masnick

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
    Michael Long, 27 Oct 2006 @ 3:49am


    Since you want to pick on music, let's go there. Apparently, in your world view, if I want a band's music I should be entitled to it for free, as the "supply" is "infinite". (Never mind the costs it took to produce it, or the time and energy and talent it required, or that if no one pays for it they'll probably have to get a real job at Wal Mart.)

    But to continue, if I feel bad about being a freeloader, I can go one of their concerts when they come around every five years or so, or buy a CD, even though I have an iPod and don't want a CD, or I can buy a t-shirt or poster I won't wear or that I don't really want on my wall. And if I don't feel bad, well, guess I get to spend my money on beer. Or....

    At last count, I've bought music from about a hundred artists on iTunes., to the tune [sorry] of about $300. The artists made something I wanted (music) and I paid directly for it in a series of "micro"-transactions. I didn't have to track down 100 CDs, or go to 100 concerts to "support" them, or make a 100 "donations", or engage in a hundred blind contract in the hopes they'll make something I want in the future, or buy a pile of crap in a hundred indirect transactions.

    Nope, they produced something of value, I bought it.

    And no, you misinterpreted what I said, I don't want a CD, I want Aimee Mann's new song; I don't want a pile of paper, I want David Weber's latest novel, I don't want a DVD, I want to see Serenity.

    Neither you nor I pay for containers, because, in and of themselves they have no value. The only thing of value in those transactions is the content: the words, the music, the movie.

    Fundamentally, I fail to see what's wrong with the current system. Hundreds of thousands of people produce content on spec. We judge those finished products on their merits, and if they have value to us, pay a miniscule fraction of their costs.

    All of your other links are, to my mind, mostly pie-in-the-sky models attempting to complicate the system by introducing contracts or dozens of other indirect transactions and mechanisms... all with the ultimate aim of getting us back to where we started.

    A plentiful supply of content at (mostly) reasonable prices.

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