The Library as an Economic Model in the Second Machine Age
January 23, 2014 5:32 AM   Subscribe

Congress takes a casual look at the peer-to-peer economy - “Finding new ways to monetise used or existing assets has the obvious and immediate effects of raising their value and the wealth of their owners, while simultaneously reducing the value of comparable stuff owned by incumbent companies — for whom monetisation already wasn’t a problem, and who find themselves burdened by the newly competitive environment. The innovations also provide a surplus to those consumers who previously would have paid more to an incumbent. And all without any new stuff actually having to be made.”

cf. Peer-to-Peer Businesses and the Sharing (Collaborative) Economy: Overview, Economic Effects and Regulatory Issues
  1. The consumerization of digital technologies: In the 1980’s and 1990’s, innovation in digital technologies was driven by the needs of business and government; the needs of consumers were generally an afterthought, met by adapting technologies developed primarily for businesses into consumer products. However, over the last ten to fifteen years, we have witnessed the “consumerization” of information technologies, whereby radical innovation is driven by the needs of consumers rather than of businesses or government. (Social media and mobile technologies provide two recent examples.) This trend is pertinent because it is often the mass-market placing of the capabilities of these new digital technologies (powerful mobile computers, GPS technology) in the hands of millions of consumers that creates the possibility of digitally intermediated peer-to-peer business. It has also led to a growing familiarity: with the idea of platform-enabled peer-to-peer exchange (initially of digital content) among consumers, as well as a greater level of acceptance of the idea of renting rather than ownership as a primary form of consumption (again, initially in markets for digital content).
  2. The emergence of “digital institutions”: As a growing fraction of human interaction and exchange is mediated by digital technologies, we have witnessed the emergence of a number of different kinds of “digital institutions”: digital technology-based platforms that facilitate economic exchange in the same way that economic institutions historically have done. For example, over the last 15 years, a digital ‘reputation system’ (which allows buyers and sellers to provide feedback about their transactions) has enabled semi-anonymous peers on the platform eBay to trade assets with each other without being physically collocated or having to relying on traditional business infrastructure. The digital rights management technologies of platforms like Apple’s iTunes and Amazon’s Kindle are, de facto, subsuming government-mediated intellectual property laws for digital music, video and books. Today, a wide variety of other digital identity verification, reputation and credit scoring systems (which often leverage the real-world social capital that mobile device usage, Facebook, LinkedIn and other social technologies bring online) facilitate trusted economic exchange in hundreds of different peer-to-peer marketplaces.
  3. Urbanization and globalization: The U.S.is currently experiencing positive rates of urbanization, and there is also some evidence of a recent trend of migration to more densely populated metropolitan areas. (Worldwide, both these trends are projected to be substantially more pronounced than in the US: the UN estimates that by 2050, the global urban population will double, and about 70% of the world’s 9.3 billion people will be city dwellers.) Cities are already natural “sharing economies” – the space constraints and population density of urban living favors consumption that involves access to shared resources over asset ownership. Urban residents have shared their assets and space informally for centuries, but innovative network technologies and social tools have made co-producing, lending, trading and renting assets cheaper and easier than ever before—and therefore possible on a much larger scale.
  4. Ecological and resource considerations: Many ‘sharing economy’ business models facilitate more efficient use of natural and other physical resources. Over time, people’s desire to choose ‘asset-light’ forms of living that utilize fewer resources and lower their ecological footprint is likely to favor peer- cto-peer sharing. Furthermore, the global pressure to rapidly create massive new urban infrastructure may induce city planners to adopt ‘sharing economy’ approaches less reliant on physical resources and more cost-effective than traditional approaches for managing growth and urbanization.
re: the ‘consumerization of digital institutions and reputation systems’, here’s Marc Andreessen on Why Bitcoin Matters (viz. the “Napsterization” of finance, payments and the transmission of ‘value’)
Bitcoin is the first practical solution to a longstanding problem in computer science called the Byzantine Generals Problem... the B.G.P. poses the question of how to establish trust between otherwise unrelated parties over an untrusted network like the Internet.

The practical consequence of solving this problem is that Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.

What kinds of digital property might be transferred in this way? Think about digital signatures, digital contracts, digital keys (to physical locks, or to online lockers), digital ownership of physical assets such as cars and houses, digital stocks and bonds ... and digital money.

All these are exchanged through a distributed network of trust that does not require or rely upon a central intermediary like a bank or broker. And all in a way where only the owner of an asset can send it, only the intended recipient can receive it, the asset can only exist in one place at a time, and everyone can validate transactions and ownership of all assets anytime they want.
oh and fwiw...
-Beyond Payments: where blockchain technology (Bitcoin protocol) is heading
-The path towards definancialisation, or not?
-The time for official e-money is NOW

so putting it all together:
  • The Second Machine Age - “It’s not just that machines can now beat humans in chess or on ‘Jeopardy’. It’s that when they are combined with thousands of cheap sensors and huge databases... new capabilities and new ideas can be combined and recombined. Economic historians tell us that it took several decades for earlier breakthrough technologies, such as the steam engine or electricity, to reach the point of ubiquity and flexible application at which they fundamentally changed the way people lived and businesses operated. Information technology and digital communication, they argue, are now just reaching that same inflection point.”
  • Economic revolutions: There could be trouble ahead - “What’s very important to recognise is that those benefits did not magically arrive of their own accord. It is an article of faith among many economists that technology doesn’t lead to widespread unemployment but does make society better off. Historical experience bears that out, but economists can be guilty of forgetting the caveats: it took a long time for society to adjust and an awful lot of intense political fighting to deliver the social reforms needed to make industrialisation work for most people.”
  • Secular stagnation: The second best solution - “Income has become concentrated in the hands of groups, like reserve-accumulating foreign governments and the rich, with low propensities to consume, the thinking goes. That has generated excess saving and pushed down real interest rates until they are substantially negative at many durations. That, in turn, has made life very difficult for central banks, which have struggled to stoke up adequate demand with nominal interest rates wedged up against zero.”
also btw...
-Marx Is Back: The global working class is starting to unite -- and that’s a good thing
-What the Founding Fathers Believed: Stock Ownership for All
-Employee share ownership: Turning workers into capitalists
-Wanted: More Worker-Owners
-The case for working less (Workers of the world: relax ;)

[previously] [previously]
posted by kliuless (23 comments total) 38 users marked this as a favorite

 
That first statement here, about how peer to peer transactions generate more wealth for the parties involved: I think it's fantastic.

All this leaves me wondering how the government intends to get money if everything trends towards privater person-person transactions...
posted by abbiecodes at 6:01 AM on January 23


Canna we just jump to the friggn post scarcity economy already, perfectly happy to be a thrall to the singularity, do silly dances, be a happy frolicking Eloi... oh wait...
posted by sammyo at 6:15 AM on January 23 [3 favorites]


All these are exchanged through a distributed network of trust that does not require or rely upon a central intermediary like a bank or broker.

How Bitcoin Plays Into The Hands Of Central Bankers And Will Facilitate The Use Of Negative Interest Rates
How Low Can You Go? Negative Interest Rates and Investors’ Flight to Safety
The Strange World Of Negative Interest Rates
Larry Summers, Secular Stagnation, and the Great Investment Drought - "Wall Street would happily allocate more money to real-world investment opportunities if the demand were there. But it's not, even with essentially free money."
so what's the solution? unfree money ...
America’s huge mistake on monetary policy: How negative interest rates could have stopped the Great Recession in its tracks
we can look to the past for local monetary solutions to go with hyperlocal manufacturing and business, see The Wörgl Experiment, a stamp scrip which slowly deteriorated in value.
posted by the man of twists and turns at 6:22 AM on January 23 [2 favorites]


All this leaves me wondering how the government intends to get money if everything trends towards privater person-person transactions...
You mean transactions from people who haven't been licensed, haven't been inspected, and haven't even read the applicable chapters of state, local, and federal regulations? Once the bureaucracy catches up to them, I'm sure the whopping fines will make up for any missing taxes.
posted by roystgnr at 6:25 AM on January 23 [1 favorite]


If bitcoin, napster (had), various torrents, usenet 'posts', and all the various p2p systems were to build in a way for the government to get their cut it would go a long way to legitimize the systems.

The right tiny percentage would be unnoticed by all but the economists and accountants.

It would be the actual right thing, contributing to society and infrastructure.

A huge benefit would be to cut out the folks that think they can get an unreasonable percentage such a the mafia and MPAA.
posted by sammyo at 6:26 AM on January 23


That first statement here, about how peer to peer transactions generate more wealth for the parties involved: I think it's fantastic.

The first statement “Do you have to give out 1099s?” nails it.

If I want to rent a cement hammer from a business, the business has to collect sales tax from me, pay business taxes, and follow government regulations if they want to say in business.

If I rent a cement hammer from my neighbour - or some person I don't even know over the internet - no sales taxes are collected and the renter doesn't have to follow any government regulation that would encumber a business renting the same item. I pay a lower fee and the renter keeps a higher percentage of the profit. Of course it generates more wealth for the parties in the peer-to-peer relationship, but what about everyone else?

An economy where no one pays taxes or submits to government regulation sounds like it could be mighty attractive to people having a certain political viewpoint.
posted by three blind mice at 6:35 AM on January 23 [3 favorites]


We could reduce the government xtions & taxes away from the government into more peer-to-peer businesses...
like the local road person directly, instead of via a state that uses 90% of the funds for limos and 10% for the actual roads?
posted by abbiecodes at 6:38 AM on January 23


sharing economy = internet middle-man economy. airbnb 100tools uber, etc. are all middle-men between consumers and the people actually performing the service. but thanks to the internet, a middle-man can quickly obtain a monopoly on transactions and then charge rent on them.

i'm old enough to remember when the internet was supposed to disrupt the brokers and middle-man who were charging rent on other people's economic activity based on a monopoly of information... guess that didn't work out after all.
posted by ennui.bz at 6:53 AM on January 23 [5 favorites]


When people can build their own cars to share on Uber, or their own houses to rent out through Air BnB, call me back.

Right now, all this does is squeeze out maximum (or I guess closer to maximum anyway) use out of assets. That's not a bad thing in and of itself, but it's just squeezing the balloon in a different direction. Using goods longer and more effectively captures more of their value, but it also delays the need for production of new goods, which reduces economic activity at the other end of the machine.

It's also hiding a lot of costs and shifting them onto the consumer in the form of wear and tear. Your car, house, cement hammer, whatever, isn't going to last as long if its utility is sucked out by other people you share it with. Not unlike the pizza delivery scam, where people make minimum wage and tips for driving pizzas all over town in their own cars. The pizza place gets dirt cheap delivery and the drivers end up losing more in wear on their vehicles than they make.
posted by Naberius at 6:54 AM on January 23 [3 favorites]


Right now, all this does is squeeze out maximum (or I guess closer to maximum anyway) use out of assets. That's not a bad thing in and of itself, but it's just squeezing the balloon in a different direction. Using goods longer and more effectively captures more of their value, but it also delays the need for production of new goods, which reduces economic activity at the other end of the machine.


but that's the thing. you don't have to think very hard to see that these businesses are basically parasites on the rest of the economy... so, you have the government looking to make deals with scam artists to squeeze money out of whatever useful businesses are left in the american economy.
posted by ennui.bz at 7:03 AM on January 23 [1 favorite]


instead of via a state that uses 90% of the funds for limos and 10% for the actual roads?

Which state can I visit to see ubiquitous government limousines? That sounds amazing.
posted by one_bean at 7:09 AM on January 23 [3 favorites]


We need the peer-to-peer economy to make the economy more efficient. Our existing complex regulatory structures were largely designed through regulatory capture and frequently create oligopolies by excluding small competitors.

In broad strokes, regulation covers behaviors that if done at scale cause social problems, but either aren't actually criminal, or criminal behaviors that society allows the rich to commit. An organization such as a hotel or AirBnB itself makes sense to regulate because they exist for an express purpose.

Individual activities are not good targets for business style regulation though because the individual does not have as specific economic purpose in their actions. Am I liable like a taxi if I pick up hitchhikers going to a festival? What if I ask them to chip in for gas money?

Instead, individual behaviors that collectively create social problems should be handled through epidemiological harm reduction methods whenever possible.
posted by jeffburdges at 7:18 AM on January 23 [3 favorites]


We need the peer-to-peer economy to make the economy more efficient. Our existing complex regulatory structures were largely designed through regulatory capture and frequently create oligopolies by excluding small competitors.

whereas the internet creates monopolies simply through network effects and collusion in the Silicon Valley VC community.
posted by ennui.bz at 7:41 AM on January 23


Can't help noticing that I can't actually rent my data to a corporation or attach limited usage rights to my personal data. DRM where it exists is not exactly peer enabled.
posted by vicx at 8:30 AM on January 23 [1 favorite]


The idea of a central bank controlling a digital currency sounds plausible enough to get my interest, but then rapidly falls apart when you start to worry about it and actually think. The reason bitcoin works is because nobody can arbitrarily change the number of coins, all the clients doing the mining/processing of transactions enforce the same set of rules, or near enough that no big scandals seem to have emerged.

A central bank would need to be able to change the rules, everyone, all at the same time, which means they would have to do all the mining, processing of transactions, etc. We all know that isn't a viable option, even when everything works right technologically.

I've thought for a long time that the downward spiral of the value of the US dollar could be stopped rather effectively if it was re-pegged to Gold. I've learned in the meanwhile that we're addicted (as a nation) to the ability to trade numbers printed on paper (or bits in a computer) for real goods, so we're unlikely to do something to end it voluntarily.

The only think holding off a Wiemar style collapse at this point is the US Military, and our ability to muscle in on the rest of the planet's resources. I doubt that we're likely to do anything that threatens the Fiat dollar any time soon... certainly not seeking to replace it with something publicly traceable like bitcoin.

---

I am greatly intrigued by the "colored coins" idea, but it supposes bitcoin is the final winner in the cryptocurrency story, which is a leverage point to worry about.

----

The ultimate money is the kilowatt-hour. Storage is an issue, but its got all the other desirable characteristics of money going for it. You can't forge it, you can divide it almost infinitely (there are quantum limits, after all), and it can be almost losslessly transformed into other forms of energy.

Right now you can transform KW/H to scrypt or SHA256 computations, and mine in pools to get bitcoin, litecoin, or any other number of cryptocurrencies, using your computer, graphics card, etc. If you place your bets well, you can even sustain a short term profit.

Longer term strategies for profit involve solar panels, wind farms, fusion or fission, geothermal, or hydroelectric.
posted by MikeWarot at 10:10 AM on January 23 [1 favorite]


The reason we have monopolies on the internet is part network effects, but its more to do with the unreasonably high barriers to entry created by the piss-poor security model we all use every day in our personal computers.

We trust Youtube to give us videos which don't have viruses in them. We trust Facebook to give us pictures of friends and family which don't have viruses in them. We trust Gmail to handle our email and not give us spam or viruses.... it's all about having someone paid to filter out badness on our behalf.

If our computers could be trusted, we could just do all that stuff ourselves, and experiment freely with stuff, much like the days of MS-DOS on floppy disks and shareware. You don't have to worry about viruses when your OS is on a write protected diskette, and you have backups of it, and the ability to make as many more as desired.

You didn't have to trust software back then, you could single-handedly tell if it was doing something wrong just by listening to the sounds of the disk drives.

Now we have to trust programs, which is nuts.

I strongly believe that 99% of what is wrong with the internet goes back to this one issue.
posted by MikeWarot at 10:17 AM on January 23


Three blind mice: you don't collect sales tax on rentals. Only the physical sale of tangible goods. Providing rentals is a service, so no sales tax.
posted by bradbane at 11:24 AM on January 23 [1 favorite]


Soon enough the 1% will own all the capital and will only rent it out to the rest of us; hence, "ownership society".
posted by newdaddy at 8:27 PM on January 23 [1 favorite]


please check out the employee ownership links above :D

re: 'hyperinflation is around the corner', i think it's one of those myths that's hard to dispell because it seems so intuitive; the fed prints money therefore inflation, never mind that it's context dependent![1] like in a liquidity trap where the economy is running below potential, deficit spending and money printing should be considered a feature, not a bug :P check out this video![2] (or ask japan ;)

in the absence of taxation authorities and central banks, in a world of private bitcoins and KW/H specie, i'd submit the public goods and coordinating functions they provide would have to be reinvented all over again (implemented more transparently and accountably?)

lastly to rebut fiat declarations of inherent fragility, if i may, lemme trot out national equity![3] whereby currency can be viewed as shares in the nation with claims on its production and, just like a company can double its shares without loss of market capitalization, a central bank that doubles the money supply does not directly influence a nation's 'wealth' at all (altho it can have distributional consequences). so then, similarly, treasury debt can be considered an 'option' to receive dollars/shares over a period of time, usw. anyway, in this light, we can increase our national wealth/equity "by instructing the Fed to create and issue the necessary finance for the creation of a new generation of US infrastructure; the transition to a low carbon future which the US can, and should, be leading; and in increasing the capacity of the US people to do so."

-Is "secular stagnation" just the death throes of the rentier class?
-TAXES, CAPITAL AND JOBS
-A Financial Times Journalist and a Writer For The Economist Beat Up On Marc Andreessen
-Art for dogecoin
-Neal Stephenson on Jaron Lanier on digital rent extraction and micropayments[*]
posted by kliuless at 2:48 PM on January 24 [1 favorite]


Jacobin: Sharing and Caring - "The “sharing economy” invokes vague leftist sentiments while moving towards more precarious employment."
posted by the man of twists and turns at 11:37 AM on January 27 [1 favorite]


I'd argue the 'sharing economy' will "bring us .. closer to the more equitable society [leftists] want". Yes, the sharing economy might be anti-Keynesian, if you define Keynesianism very broadly, but leftism is not defined by Keynesian economics. And Keynesianism has failed to make our society more equitable. There is nothing equitable about petty oligopoly like taxis. Improvements in efficiency make leftists uncomfortable because they threaten the convenient fiction that work is necessary which keeps so many leftists allied with capitalists.
posted by jeffburdges at 12:10 PM on January 27


-The gamification of the economy: creating rivalry where there is none
In a world of surplus capital, everyone should theoretically be a winner. The multi-generation resource allocation game we’ve been playing, in other words, comes to an end. Or as Keynes put it, the economic problem is solved. We don’t need an incentive to do work, because the need for work has been so greatly diminished.

The problem, of course, is that humanity still remains hard-wired for competition. Socialism and sharing doesn’t come easy to us, even when we’ve got more claims on things than we could ever possibly hope to use in a lifetime.

As the criticism usually goes, we are genetically predisposed to competition, rivalry, oneupmanship and ruthlessness, and will likely continue to battle on regardless.

Or failing that, abundance will make us so idle that society will just decay of its own accord.

To wit, this Radiolab feature documenting the story of what happened when a troop of wild baboons — usually extremely aggressive by nature — became accustomed to living on the castoffs of a nearby tourist hotel. Yes, they became nicer, more gentle and more inclusive of rival baboons, but they also became lazy, decadent and diseased.

Which leads us to the real point of this post. While it’s clear that abundance can have a civilising effect that has the capacity to blunt the rivalrous human instinct and undermine the value of capital, it’s unlikely that it will ever be able to extinguish the human competitive spirit entirely. Lacking serious scarcities to fight over, humanity will increasingly be inclined to create entirely new scarcities (like Bitcoin) or other synthetic challenges to encourage rivalry, competition and stimulation instead.
-Is America working?
-David Graeber: What’s the Point If We Can’t Have Fun?
-Ethereum: Turing-complete, programmable money
-The internet of finance
-When Will We See a GoogleCoin?
-Socialism, Capitalism and Bitcoin
-Jeremy Grantham on Tesla, Fertilizer Wars
-Foxconn Working With Google on Robotics
-Rebuilding With Robots
-Caltech: secrets of the world’s number one university
-America And The Protestant Work Ethic, Ctd
posted by kliuless at 9:21 PM on February 11 [2 favorites]


Labour markets - A theory of troubles
Since this post is long and not exactly bursting with colour, I'll go ahead and share the gist of the story in hopes of enticing you to read on: because we rely on market wages to allocate purchasing power we have resisted technology-driven reductions in employment, and because we have resisted that decline in work we have trapped ourselves in a world of self-limiting productivity growth. Enticed? Good.
posted by the man of twists and turns at 12:18 PM on February 18


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