The central insight of Coase’s Penguin was that peer production is form of economic organization on par with the market (first explained by Adam Smith) and the firm (first explained by Ronald Coase). Benkler expands on this tripartite classification of organizational structures in The Wealth of Networks. He spends quite a lot of time pointing out that non-market, non-firm methods of social organization account for a substantial fraction of our economic lives. We carpool, have dinner parties, give directions to strangers, help each other move, etc. These activities generate goods and services (meals, rides to work, information) that could also have been obtained via the market, but for a variety of reasons we sometimes find that non-market organizational methods meet our needs better.
I think this is a point that libertarians tend to under-appreciate. In college, I dated a left-of-center girl who liked to shop at the local grocery co-op rather than a commercial grocery store. It was a topic of frequent argument. I’d point out the relative efficiencies of commercial grocery store organization, she’d stress fuzzier, more community-focused advantages: the sense of community, the superior treatment of workers, the closer connection between customers, employees, and management, etc.
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Through Open Government for British Columbia (there’s a blog for everything and I read them all), I’ve stumbled across an interesting article called The Political Economy of Peer Production.
To those of you skeptical of all things peer as a broad attack on markets and capitalism, I quote the following: “Despite significant differences, P2P and the capitalist market are highly interconnected. P2P is dependent on the market and the market is dependent on P2P.”
Consistent with the peer production theory, I’m not going to offer a lot of gloss. I leave that to you commenters.
Nick Carr has a puzzling post about the fact that a Google search for “Martin Luther King, Jr.” returns, as its first result, a white supremacist website. The first sentence of the post is “It’s funny how a set of instructions – an algorithm – written by people can come to be granted, by those same people, a superhuman authority.”
One might expect the post to go on to identify someone granting Google’s algorithm a superhuman authority. One would be wrong. Carr writes that AOL, which has licensed Google’s search engine for its own site, “finds itself in the uncomfortable position of promoting the white supremacist site to its customers.” And Google says its results are generated automatically, and so it “can’t tweak the results because of that automation and the need to maintain the integrity of the results.” Carr concludes scornfully that Google believes that “human judgment is an unfit substitute for the mindless, automated calculations of an algorithm.”
This is silly. It’s not hard to understand why Google would be reluctant to second guess the results of its algorithm. The issue isn’t that human judgment is inferior to algorithmic results. The problem is that human judgment is incredibly expensive compared with computing power. Because obviously, this wouldn’t be the only example of manipulated search results. I’m sure the White House would immediately write to Google about this result. Tens of thousands of other individuals and groups who believe some search result or another had slighted them would come out of the woodworks to complain. Google would have to hire some new staffers to come up with some rules governing when search results get suppressed, and then they’d have to hire a bunch more staffers to apply these rules to thousands and thousands of individual complaints.
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I’m reading Yochai Benkler’s The Wealth of Networks. I’m only a few pages in, but I thought this quote, on page 16, was interesting:
My approach heavily emphasizes individual action in nonmarket relations. Much of the discussion revolves around the choice between markets and nonmarket social behavior. In much of it, the state plays no role, or is perceived as playing a primarily negative role, in a way that is alien to the progressive branches of liberal political thought. In this, it seems more of a libertarian or an anarchistic thesis than a liberal one. I do not completely discount the state, as I will explain. But I do suggest that what is special about our moment is the rising efficacy of individuals and loose, nonmarket affiliations as agents of political economy. Just like the market, the state will have to adjust to this new emerging modality of human action. Liberal political theory must first recognize and understand it before it can begin to renegotiate its agenda for the liberal state, progressive or otherwise.
Now, from Benkler’s language, here and elsewhere in the book, it seems quite clear that his basic sympathies are with the “progressive branches of liberal political thought.” Yet Benkler is smart enough to recognize that the story he’s trying to tell doesn’t fit naturally within the progressive narrative. The emerging economy of peer production isn’t being created by democratic deliberation under the wise guidance of state regulation. No government programs are required or especially helpful to the process. Liberals can be excited about it to the extent that it’s an alternative to having the big, evil corporations do stuff, but it doesn’t leave much room for their political program.
In contrast, Benkler’s thesis dovetails nicely with the standard libertarian narrative–at least if libertarianism is understood as an ideology that defends individualism and voluntary cooperation in all its forms, rather than an ideology narrowly focused on promoting markets as the only legitimate form of economic organization. It’s a little bit unfortunate that left-wingers like Benkler and Larry Lessig are the most visible evangelists for the economics of peer production, because this is really a libertarian story: public goods being produced by the voluntary cooperation of individuals without a government program in sight.
On his aptly named blog Ideas David Friedman discusses the gift economies (two kinds). It reminds me of Tim Lee’s post a couple months ago, Markets Don’t Need Money.
According to Friedman, when someone gives things away, what he gets, “in addition to his own enjoyment and the feeling of a useful job done, is status. . . . You pour your gifts out to the world and the world, if you are lucky, repays you in a variety of indirect ways.”
This is true, but I think it can be a little more direct and a little more than luck. People who are smart or skillful, who work hard, and who give away high quality intellectual property may get grants, may win jobs, command speaking or other performance fees, and have many meals and hotel stays purchased for them, to name a few ways that they are fairly directly rewarded.
On Tim’s post, TLF friend Luis Villa commented correctly on the need for money, but the two economies aren’t sealed from one another in any significant sense. There is a lot of crossover between the money economy and the gift economy. One just uses a standard metric of value and the other doesn’t.
Especially in the intellectual property area, people would do better to think of value rather than focusing solely on money. Pretty much all human action is economic behavior. (I didn’t come up with that idea just now by myself.)
Via Patri Friedman, here’s a fascinating article on the people who write Wikipedia:
I purchased some time on a computer cluster and downloaded a copy of the Wikipedia archives. I wrote a little program to go through each edit and count how much of it remained in the latest version. Instead of counting edits, as Wales did, I counted the number of letters a user actually contributed to the present article.
If you just count edits, it appears the biggest contributors to the Alan Alda article (7 of the top 10) are registered users who (all but 2) have made thousands of edits to the site. Indeed, #4 has made over 7,000 edits while #7 has over 25,000. In other words, if you use Wales’s methods, you get Wales’s results: most of the content seems to be written by heavy editors.
But when you count letters, the picture dramatically changes: few of the contributors (2 out of the top 10) are even registered and most (6 out of the top 10) have made less than 25 edits to the entire site. In fact, #9 has made exactly one edit–this one! With the more reasonable metric–indeed, the one Wales himself said he planned to use in the next revision of his study–the result completely reverses.
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Luis Villa has an interesting post about the evolving understanding of open source software:
I’ve long thought that in open source software we are seeing a trend away from trust in an institution (think: Microsoft) and towards trust in ‘good luck’- i.e., in the statistical likelihood that if you fall, someone will catch you. In open source, this is most manifest in support- instead of calling a 1-800 # (where someone is guaranteed to help you, as long as you’re willing to be on hold for ages and pay sometimes very high charges), one emails a list, where no one is responsible for you, but yet a great percentage of the time, someone will answer anyway. There is no guarantee, but community practices evolve to make it statistically likely that help (or bug fixing, or whatever) will occur. The internet makes this possible- whereas in the past if you wanted free advice, you had to have a close friend with the right skills free time, you can now draw from a much broader pool of people. If that pool is large enough (and in software, it appears to be) then it is a statistical matter that one of them is likely to have both the right skills and the right amount of free time.
Clay Shirky today makes an argument that this isn’t just something that is occurring in open source, but is hitting other fields of expertise as well: “My belief is that Wikipedia’s success dramatizes instead a change in the nature of authority, moving from trust inhering in guarantees offered by institutions to probabilities created by processes.” Instead of referring to a known expert to get at knowledge, you can ask Wikipedia- which is the output of a dialectic process which may fail in specific instances but which Clay seems to suggest can be trusted more than any one institution’s processes in the long run.
This is an excellent point, but it’s actually not a new one. Two examples that immediately spring to mind are Darwin’s Origin of the Species and Friederich Hayek’s The Road to Serfdom (and, more specifically, his subsequent essay “The Use of Knowledge in Society” ). Darwin and Hayek each described decentralized processes in which the correctness of the result is produced by statistical processes, rather than by the good judgment of a trusted authority.
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Chris Anderson was nice enough to send me a review copy of his new book, The Long Tail, which has been storming the best-seller lists. So far (a third of the way through) the book lives up to the hype: it’s a quick read that’s packed with interesting stories and insights about the changing rules of the information economy. If you haven’t gotten your copy yet, you should.
For those who haven’t yet encountered Anderson’s work, he argues that by reducing the costs of distributing information, the Internet has radically expanded the set of products that are economically viable. A big Wal-Mart might have 5,000 CDs on its shelves, but at the iTunes Music Store, I can choose from among hundreds of thousands of albums. Anderson dubs these less-popular works the “long tail” of music, and he demonstrates that while each of these “misses” aren’t commercially significant by themselves, when you add them up, they comprise a significant part of the total demand for music. Anderson demonstrates that the same phenomenon can be found everywhere you look: Amazon makes a substantial fraction of its book revenue from books that can’t be found in any Borders. A substantial fraction of Netflix rentals can’t be found in any Blockbuster.
Anderson’s book explores the implications of this shift. He argues that once consumers have the option of wandering far from the beaten path of mainstream hits, many of them discover stuff they like a lot better than the mainstream fare. Now that “long tail” products are readily available, the demand for them is growing, as more and more consumers find new products they never would have found in a pre-Internet age. This, in turn represents a serious threat to the hit-dominated culture of incumbent content companies, whose businesses are carefully tuned to cranking out mainstream fare that will appeal to the broadest possible audience. The upshot is that over time, the tail will be more an more important, transforming our culture from the homogenous, hit-dominated world of the 20th Century to a decentralized culture with thousands of micro-niches of varying sizes. In short, Anderson argues that the blockbuster isn’t an inevitable feature of modern media, but rather is an artifact of the centralized distribution technologies of the 20th Century.
I don’t have any real quarrel with that thesis. But “what he said” doesn’t make for an interesting blog entry, so below the cut, I’ll offer a quick criticism.
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Forbes has a profile of Mark Shuttleworth and Ubuntu. What I found most interesting about it is the financials:
Ubuntu now has 4 million users, half of which are governments, universities and a smattering of businesses. It adds new ones at a rate of 8% per month. After its public release in October 2004, Ubuntu quickly deposed Red Hat’s Fedora as the most popular version of Linux on DistroWatch, a Web site that caters to Linux users. Ubuntu works in 22 languages, and Canonical, the company Shuttleworth set up to distribute his software, will send a free Ubuntu CD anywhere in the world. New users rave about the simple user interface, which has gained recent converts in a couple of well-known bloggers who switched from Apple Computer’s OS X.
In May, Sun Microsystems announced plans to offer Ubuntu on Sun’s Niagara chips, which power its newer Sparc servers. While Sparc servers aren’t a particularly big market, the stunt made clear that Shuttleworth aims beyond home hobbyists.
Canonical has burned through $15 million of Shuttleworth’s money in two and a half years. He says that it will take him at least another two years to even know whether it has a chance to become profitable, and that it may never return his investment. But that doesn’t matter. He’s paying all the bills either way, along with setting up a $10 million endowment for the Ubuntu Foundation that’s earning interest for a day when his attentions may drift elsewhere.
I mean no disrespect to Mr. Shuttleworth when I say this, but $15 million is a shockingly small amount of money with which to build a full-featured desktop operating system. Microsoft’s advertising budget for each version of Windows is an order of magnitude larger than that. Apple pulls in hundreds of millions of dollars with every release of Mac OS X, while Microsoft makes billions of Windows.
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This has got to be the silliest critique of the blogosphere I’ve seen in years. Nick Carr writes that the blogosphere is a “fraud,” a “grand system of patronage operated by a tiny, self-perpetuating elite.” He says that non-“A List” bloggers are like peasants begging at the gates of the royal elites, pathetically linking to them in a desperate hope that the “A list” blogger will take pity on them and link back. He quotes Seth Finklestein’s tale of woe:
I [write my blog] because:
1) I was suckered into the idea that blogs were a way to “route around” media power, and to be HEARD.
2) I had delusions of influence.
3) The random-payoff of attention makes it seem far more effective than it actually is.
4) It’s painful to admit that you’ve wasted so much time and effort and pretty much nobody is listening.
Blog evangelism is very cruel, as it preys on people’s frustrated hopes and dreams.
My blog is read by a few dozen fans … I’ve come close to shutting it down at times, and will finally reach the breaking-point eventually.
Seth gives the impression that he toils in obscurity, with maybe 20 or 30 people reading what he writes on a good day. Yet Alexa ranks Seth’s site #84,819 among all web sites, with a “reach” of 24 readers per million web users. In contrast, TLF is ranked #295,434, and we have a “reach” of 4 per million. Technorati tells a similar story: TLF is ranked #7076 among all blogs with inbound links from 294 sites. Seth’s blog is ranked #5443, with inbound links from 365 blogs.
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