Ethics and Law in New Media/The Networked World

The new kind of economy

Yochai Benkler writes in his The Wealth of Networks: "There are no noncommercial automobile manufacturers. There are no volunteer steel foundries. You would never choose to have your primary source of bread depend on voluntary contributions from others. Nevertheless, scientists working at noncommercial research institutes funded by nonprofit educational institutions and government grants produce most of our basic science. Widespread cooperative networks of volunteers write the software and standards that run most of the Internet and enable what we do with it. Many people turn to National Public Radio or the BBC as a reliable source of news. What is it about information that explains this difference? Why do we rely almost exclusively on markets and commercial firms to produce cars, steel, and wheat, but much less so for the most critical information our advanced societies depend on?"

Benkler's approach is centered on three important things which are obtaining a more and more central position in our society - information, knowledge and culture. These three are equally vital for human development and freedom. While having been somewhat forced to the background in the industrial societies by the likes of capital, money and profit, they have been increasingly in the front since the beginning of the Internet age (here it means not the very birth time of the Net in 1969 but rather the emergence of the Web and Internet going into masses during the 90s).

According to him, the earlier industrial information economy, which did use and demand information but put it in service of industry only, is going to be replaced by the new kind of networked information economy (ct Castells, Handy and Himanen in the previous lecture). He wrotes: "What characterizes the networked information economy is that decentralized individual action - specifically, new and important cooperative and coordinate action carried out through radically distributed, nonmarket mechanisms that do not depend on proprietary strategies - plays a much greater role than it did,or could have, in the industrial information economy. The catalyst for this change is the happenstance of the fabrication technology of computation, and its ripple effects throughout the technologies of communication and storage. The declining price of computation, communication, and storage have, as a practical matter, placed the material means of information and cultural production in the hands of a significant fraction of the world's population - on the order of a billion people around the globe."

Three factors that explain the new, emerging system are the following:

nonproprietary strategies have always been more important in information production than they were in the production of steel or automobiles, even when the economics of communication weighed in favor of industrial models. Education, arts and sciences, political debate, and theological disputation have always been much more importantly infused with nonmarket motivations and actors than, say, the automobile industry.
the recent rise of nonmarket production to much greater importance. Individuals can reach and inform or edify millions around the world. Such a reach was simply unavailable to diversely motivated individuals before, unless they funneled their efforts through either market organizations or philanthropically or state-funded efforts.
the rise of effective, large-scale cooperative efforts - peer production of information, knowledge, and culture. These are typified by the emergence of free and open-source software.

For people who have been immersed to the strictly monetary models for long time (and thereby have become Econodwarfs as described by Eben Moglen), the new time is quite difficult to understand. Have people lost their taste for wealth or skill to make money? Probably not. But like we saw in the previous lecture, times have changed. While individual, conflict-competition approach may have been the best way to accumulate wealth, it seems to have lost some of its power. Instead new, seemingly 'softer' cooperative models have surfaced. Benkler writes: "Human beings are, and always have been, diversely motivated beings. We act instrumentally, but also noninstrumentally. We act for material gain, but also for psychological well-being and gratification, and for social connectedness." This is perfectly in line with the Linus' Law and Wozniak's formula below.

Of motivation: what the Econodwarfs don't get

The initiator of the Linux project, Linus Torvalds, has formulated an interesting explanation of work motivation (which has been named the Linus' Law after him, but is mostly based on the well-known Maslow's hierarchy of needs):

survival
social position
entertainment

Thus, people start working to cover the most basic needs - food, accommodation, clothing. This is the level where most things can be explained in economic terms. However, if these needs are covered, people usually still keep working - even Bill Gates has kept going after Windows 3.1 made him the richest man in the US. They are out to get the social position - higher social status, admiration and respect from others. But what keeps people going on after they have both money and name? The answer is likely "fun". They enjoy what they do. Perhaps the best example is Akihito - a respected Japanese maritime biologist and amateur musician, who also happens to be the Emperor of Japan...

Another well-known man from the IT world has reached largely the same conclusion. Steve Wozniak was one of the two founders of Apple. Pekka Himanen has described in his "Hacker Ethic" how Wozniak gave up Apple at the age of 29, sold a part of his shares to colleagues for nominal price (to ensure somewhat fairer distribution of wealth), went back to the university (he had dropped out earlier), and after graduation started to work with children. His formula is H=F3 - Happiness = Food, Friends, Fun.

The soup is more than just the sum of ingredients

According to Benkler, the networked information economy improves the practical capacities of individuals along three dimensions:

it improves their capacity to do more for and by themselves
it enhances their capacity to do more in loose commonality with others, without being constrained to organize their relationship through a price system or in traditional hierarchical models of social and economic organization
it improves the capacity of individuals to do more in formal organizations that operate outside the market sphere.

Certain characteristics of information and culture lead us to understand them as "public goods", rather than as "pure private goods" or standard "economic goods". When economists speak of information, they usually say that it is "non-rival" - its consumption by one person does not make it any less available for consumption by another. Once such a good is produced, no more social resources need be invested in creating more of it to satisfy the next consumer. Apples are rival. If I eat this apple, you cannot eat it. If you nonetheless want to eat an apple, more resources (trees, labor) need to be diverted from, say, building chairs, to growing apples, to satisfy you. The social cost of your consuming the second apple is the cost of not using the resources needed to grow the second apple (the wood from the tree) in their next best use. Information is non-rival. Once a scientist has established a fact, or once Tolstoy has written War and Peace, neither the scientist nor Tolstoy need spend a single second on producing additional War and Peace manuscripts (if not to take into account possible efforts on raw copying) or studies for the one-hundredth, one-thousandth, or one-millionth user of what they wrote. The physical paper for the book or journal costs something, but the information itself need only be created once. Economists call such goods "public" because a market will not produce them if priced at their marginal cost - zero.

Moreover, the non-rivalry is not the only important quality of information. Another is that it is used both as input and output of producing more information. For example, in science, reliance on previous experience (results, theories) is in essence mandatory (Newton: "If I have seen farther it is because I stand on the shoulders of giants."). In this case, applying the traditional model of IP will likely result in adding unnecessary social and legal burdens to information production. As Benkler puts it: "If we pass a law that regulates information production too strictly, allowing its beneficiaries to impose prices that are too high on today's innovators, then we will have not only too little consumption of information today, but also too little production of new information for tomorrow."

Examples of the new kind of information production include:

Linux (coming from scratching a personal itch)
Wikipedia (robust mechanism, rapid error correction)
Second Life (a commercial project with huge contributions from community)
Slashdot (the peer review in a new way)
Project Gutenberg (proofreading system)
distributed supercomputers (SETI@Home, Folding@Home, Genome@Home)
P2P (incl Skype)

Reference

Yochai Benkler. The Wealth of Networks: How Social Production Transforms Markets and Freedom. Yale University Press 2006.
Pekka Himanen. Hacker Ethic. Penguin Books, New York 2002.
Eben Moglen. Anarchism Triumphant: Free Software and the Death of Copyright. First Monday, Vol 4, No 8, 1999.
Eric S. Raymond. Homesteading the Noosphere. First Monday, Vol 3, No 10, 1998.

Food for Thought

Yochai Benkler advocates the volunteer-based activities as a leading force in the future society. Others have criticised the idea as promoting amateurs (as opposed to paid professionals). What do you think?
Read from the "Anarchism Triumphant" by Eben Moglen (see the link above) about the concepts of 'IP-droid' and 'Econodwarf'. Are these 'creatures' universal (existing everywhere)?

To Do

Write a short opinion in your blog about the real applicability of nonmarket production and related strategies in your main field of activities (e.g. design, education etc)