been trying to frame use vs. exchange (economic) value in relation to intellectual property and borrowed an analogy from karl marx & frederick engels, "All that is solid melts into air," which also happens to be a nice book on modernity by marshall berman.cf. Content Is a Pure Public Good
so the use value for air is very high, without air we would not be able to breathe. but air's economic value is low, because no one as yet has figured out a way to ration air to individuals. because of its commodity status air is freely shared despite its clear value.
however, in an environment where air is scarce, such as underwater or outer space, the control of air is much easier to regulate. those who own the compressors, tanks and regulators (infrastructure) to deliver air to paying customers are able to derive economic value from what nominally is a ubiquitous and free resource.
the same reasoning behind use and economic value can be applied to IP. control of IP in the past was relatively straightforward given the use value of IP was limited in scope to those who had the necessary infrastructure in place to utilize it. in the music industry, recording and selling songs were a function of owning the distribution rights and the facilities to mint IP onto vinyl, tape, CD or whatever media format desired.
high capital costs were a deterrent for widespread multiplication of IP and hence supply was relatively easy to regulate, copyrights enforced and economic value maintained. but with widespread and low cost availability of equipment to record and exhibit all sorts of media, even marginal consumers are now able to gain access to IP (and even produce it), rendering those types of IP essentially free.
the important thing to recognize is how amenable IP is to commodification. given use value for a specified market, if the IP represents a complicated process that only companies with large resources are able to replicate, then its economic value is easily defended. but if fixed and marginal costs to replication are low, the ability to defend IP declines, whether through legal enforcement or otherwise. it becomes like air.
[economic theory] started out by assuming perfect knowledge and when that assumption turned out to be untenable it went through ever increasing contortions to maintain the fiction of rational behavior. Economics ended up with the theory of rational expectations which maintains that there is a single optimum view of the future, that which corresponds to it, and eventually all the market participants will converge around that view. This postulate is absurd...also an exalted state of affairs known as perfect information/competition and a precondition for market efficiency, which he argues is really just "market fundamentalism" and what got us into so much trouble to begin with; an imaginary (toy) dialog might go something like this:
economist: as a starting point, assume the market is efficient.so apparently there's a lot of soul-searching going on right now where a lot of economists who used the efficient market hypothesis to provide (what turns out to be) the veneer of mathematical precision are having to come to grips. as soros puts it, "the social sciences cannot produce results comparable to physics." like taking the EMH as a given just isn't the same thing as doing so with, say, the riemann hypothesis or something. i dunno.
soros: but it's not.
economist: well, assume that it is.
soros: but it's not!
etc.
One way to understand Keynes's General Theory is that Say's Law is false in theory but that we can build the running code for limited, strategic interventions that will make Say's Law roughly true in practice. The modern American liberal economist's view of libertarianism is much the same: libertarianism is false in theory, but it is very much worth figuring out a set of limited, strategic interventions that will make the libertarian promises roughly true in practice.or, in other words (and getting me back on topic ;) how to make efficient markets "roughly true in practice."
...each agent issues her personal IOUs, and a costless efficient clearinghouse adjusts the exchange rates among them so the markets always clear. The results suggest that if the information system and clearing are so good as to preclude moral hazard, any form of information asymmetry, and need for trust, the economy operates efficiently at any price level without government money. These conditions cannot reasonably be expected to hold in natural settings. In a second set of treatments when agents have the option of not delivering on their promises, a high enough penalty for non-delivery is necessary to ensure an efficient market; a lower penalty leads to inefficient, even collapsing, markets due to moral hazard.i only read the abstract :P but as it hints, and to reiterate, any information system, to be efficient, must eliminate moral hazard and information asymmetries... um, if i may resort to platitudes again, easier said than done!
As e-money emerged, symposia were full of professors of macroeconomics and central bankers lamenting the difficulty of controlling this new supply of money. In other words, the efficiency of the advanced economy had to serve the efficiency of monetary policy, not the other way around.so like, may
Instead of suppression, how could the new technologies create new tools for government?
The most important aspect is the ability of the new technology to differentiate and customize. On the internet, each packet is identified as to sender and receiver. Which means that one can identify users, and uses. And if we can identify, we can differentiate.
This is very powerful. Traditional macroeconomics was very aggregate. It was their essence. The reasons were two: for theorists, it was easier to write equations that way. And for policy implementation, it was difficult, in very practical administrative terms, to disaggregate the many economic agents in a society.
But now, we have tools that can differentiate. With proper legal authorization, a central bank could charge different overnight rates to different banks or vary reserve requirements. Sales and other taxes could be varied selectively for different products, regions, or users. Tax credits could be tied to spending for particular uses. Stimulus money could go towards spending or investments that are above the level of last year.
To give a close analogy: In the past, toll roads could charge motorists only in a very undifferentiated way. But now, with automated billing and stored payment systems, we can charge different prices by time of day, by frequency of use, by the characteristics of the driver, by the characteristics of the car, and by the proximity of a driver’s residence to public transportation alternatives. In sum, we possess a much finer tool than before to stimulate and to depress demand for transportation, and to do so at a lower cost due to the ability to pin-point incentives.
We need, of course, to deal with some implications. One is on individual privacy. To differentiate one needs to know a lot. But this problem could be resolved through a system of pseudonyms and trusted intermediaries. A second problem is international trade. Basically, could a government differentiate in favour of its own people? The World Trade Organisation rules say no. But that is likely to become a relic of the industrial age.
The industrial age was the age of massification. Mass production. Mass consumption. Mass media. Mass advertising. But not any more. All around, we see customisation and individualization. Macroeconomic activity by government will eventually follow, and become a sub-aggregated ‘mezzo’ economic policy. Economists, technologists, and policy analysts should work to develop these tools.
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About a decline though, I don't know. It may simply be that the web filled up with crap, and the total amount of cool stuff stayed the same. But on the other hand, I also feel like the web used to be about building cool things and anyone could break out some PHP and build something cool, whereas now there's just this universe of 'social media' people and sundry twits who spend all their time talking about each other.
As far as #1, things like various app stores for other phones really does get you the chance to make money off small applications.
#2: What the hell is a "Currency based in abundance"? There is never going to be a limitless supply of human labor. What the hell does that even mean? Sounds like gobbledygook from Wired circa 1999, when everyone was going to get super-rich from writing websites visited by other web designers. Are we going to pay content creators in free downloads or something?
posted by delmoi at 4:31 AM on November 22, 2009 [13 favorites]