The Economics Of Abundance Is Not A Moral Issue

from the continuing-the-series dept

As regular readers know, I've been working on a series of posts discussing the concept of economics when there's a lack of scarcity. My last post on the importance of understanding "zero" in economics (and the fact that many of the problems people have in grasping the subject being due to a misunderstanding of zero) kicked off a really interesting discussion, that has me diverging from my planned third post in the series. Instead, I'd like to focus on one of the key objections people keep coming up with: the idea that this whole concept of the economics of abundance makes no sense because it means the creators of content make no money and they have a right to make money for their creative output.

It makes for a compelling emotional argument, but it is wrong on two major points. First, is the idea that it means creators of content can't make any money. In fact, nothing can be further from the truth. What this series is leading up to is an explanation of how the opportunity for making money is even larger when you understand the economics, and don't rely on directly selling the non-scarce good. However, for now we'll leave that aside and focus on the second point: that there's a right to make money. That's completely false. Economics is not a moral issue. It doesn't care about anyone's "right" to make money from their creative output... and neither should you. The idea that anyone automatically has a right to make money from their creative output is wrong. Everyone has the right to try to make money out of their creative output, but if the market isn't there, then there's no money to be made.

For example, I could draw a picture on a scrap of paper and try to sell it as fine art -- but no one would buy it, because my artistic drawing ability is pretty weak. That is, the market would properly value my drawing at something close to zero because there would be no demand for it. It has nothing to do with my right to make money. Similarly, in a situation where there's a lack of scarcity, the market would properly value something at close to (or equal to) zero because there's infinite supply. It has nothing to do with the moral issue of the creators right to profit from the creative output, and everything to do with the market at hand.

Perhaps part of where this gets confusing is that we have the current situation to fall back on: where content creators have had a good run selling their content. People have trouble then understanding why we would suggest that they should learn how to take the same content they've been selling for money and give it away free. The issue here is that the comparison is wrong. It's not about a choice between being able to sell the content for money or giving it away for free, but a recognition of where the market is going. Historically, the content has been made scarce by connecting it to a specific media (music on CDs, video on tape/DVD, etc.). What the internet is doing is breaking down the barrier of that scarcity, and that's changing the market, pushing out the supply to infinite levels and putting clear pricing pressure on the content. People used to make a living selling buggy whips too, but the market changed, and they couldn't any more.

In other words, it's wrong to look at this as a "choice" between the old way and the new way, but to look at the market trends and recognize that the old way (pretending the content is scarce) won't be viable any more -- and when that happens, those who try to sell their abundant good based on scarcity will find that there is no market and no matter what "right" they have to try to make money, the market won't care. Once you realize that, you can make the argument that content creators should wait until that market shift is complete to make the change, but as we go forward, I'll hopefully make a convincing argument that it actually makes much more sense (and much more money) to begin shifting now, before being forced to shift. But, for that, we'll have to wait a little longer...

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    Xiera, 15 Nov 2006 @ 4:24pm

    Re: Mikes A Commie Thief

    "If the market was shattered due to mass larceny does your logic still tally? If everyone is jumping off a cliff shouldn't you do it to?"

    If a severe case of mass larceny occurred, the market would still exist. People would still demand the products/content. If there is no demand, then people (and corporations) still have the -right- to try to sell their products/content, but "there's no money to be made". If everyone is jumping off a cliff, you -do- have the -right- to do it too.

    "First of all, don't compare your sketch of a booger on a scrap of paper in the same arena as musicians across America and abroad that craft music to diminish the hurt you are causing."

    You clearly missed the point. He's saying that a lack of demand results in the same consequences as an infinite supply. If I could draw a Supply-and-Demand schedule for you online, I would gladly show you how this is the case.

    I'll try to explain in words:
    - Zero demand: The demand curve is a vertical line at 0. The supply curve can be anywhere it wants, but it will eventually reach an equilibrium at price = 0.
    - Infinite supply: The supply curve is a vertical line at infinity. The demand curve can be anywhere it wants, but it will never intersect the supply curve because infinity is greater than all numbers and one cannot logically compare infinity and infinity.

    "The Internet is constructing an unspeakable supply and breaking down all demand. The end of capitalism... sounds communist to me...

    Your a communist aren't you Mike? I can tell you are sure not a capitalist. Content creators should be paid for content they sell. If they cannot sell their worthless music then they should not make money. However, I feel confident in consumers to make that decision rather that a THIEF like you!!! Your trying to build an argument to justify something that is immoral. I will admit right here and now I download content and I will continue to thieve content anywhere I can get it. But I don't try to rationalize my immorality with rhetoric about "economics when there's a lack of scarcity" you are the weakest link... go home :-("

    First of all, if Mike was a communist, he would be recommending that the government regulate the price of all online media produced, that the government collect all payments on online media, and that all producers of online media be equally paid. This is not what he's suggesting.

    Rather, Mike suggests that the very mechanism that drives the free market economy (supply and demand) is being -obstructed- by so-called "rights" that producers do not (read: should not) have.

    And when you are criticising a piece such as Mike's, please stick with the original assumption: that economics is not about morality.

    Don't whine about something that you clearly do not understand. Thank you.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Special Affiliate Offer

Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Report this ad  |  Hide Techdirt ads
Recent Stories
Report this ad  |  Hide Techdirt ads


Email This

This feature is only available to registered users. Register or sign in to use it.