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...

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  1. identicon
    Amedeo Amendola, 22 Apr 2007 @ 10:27am

    Giving away somebody else's property

    Before dealing with the economics of scarcity or abundance, we must deal with the question whether it is licit or criminal for one person (or corporation) to give away (make a gift of) somebody else's property. Examples:
    -- Do-gooders take away from the rich and give to the poor.
    -- The governemnt takes part of a worker's income and gives it away to non-workers, to political friends, and to countries hungry for money.
    -- Business corporations sponsor radio or television programs (to advertize themselves), which they pay for, not out of their personal income, but out of money extracted from the customers [in the addition to the legitimate payments for their sold products]. They do not give away this extracted money; they use it to pay the broadcasting coorporations. A program of a broadcasting coorporation may consist of recorded music. Said broadcasting corporation pays the music recording industries for the use of their records. The recording indusrties own the physical records, the media on which the music exists. But the music is owned by those who pruduced the music. So, while the music producers do not sell or give away their product to the recording instrustries, the latter sell it. So eventually the broadcasters (as well as the internet broadcasters) give away the musicians' property.

    Analogous situation: I buy a book; that is, I am paying for the physical medium in which a poet's work exists. This happens to be a rare book. So, a broadcasting company pays me for the use of this book. A televison station takes it upon itself to advertize for a philarmonic company (from which it gets paid) and diplays, free of charge, page after page the book on the screen so that anybody may read it (and can make himself a video-recording of). The broadcasting company is giving away somebody else's property, namely the poet's texts. (If I, a private individual, were to make copies of my book and sold them, I would end up in jail, either because I sold re-prints of the printe's property, or because the author never sold his text to me or give away his text to me.)

    The issue as to whether it is licit or criminal for anybody to give-away away somebody else's property is to be answered jurisprudentially [by reasoning about Rightness], not in terms of whether the proprietors get any benefit or not from the give-aways, whether the broadcasters are entitled to make money or not by engaging in selling [the use of their broadcasting faciulities], or in terms whether the away-givers are the new do-gooders for the entire population of a country, the praiseworthy philanthopists of our times.

    "Economics," namely BUSINESSMEN AND MERCHANTS, may not operate in terms of what is right or criminal, when they deal with somebody else's properties, but when a criminal property offence is done unto them, then they practice jurisprudence.

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