Peter Swire at Ohio State U and former privacy advisor to the Clinton Admin explains why he thinks Yochai Benkler gets it wrong. Benkler overstates the shift from market to non-market, and Peter will explain “why an economics-based alternative is pragmatically useful.”

Your laptop is an information factory. Consumers own the means of production, which sounds pretty economic, he says. He says he’s a big fan of Yochai, but not with the major thesis that says it is “social rather than proprietary and market relations that create all the big effects — freedom, equity, etc.” (p. 92). But the shift to non-market is not proven, and there are pragmatic reasons to employ an economics-based approach.

Is non-market overstated? It’s defined too broadly in the book, says Peter. And Yochai is observing the early adopters, but as the niche grows it may well go commercial. The amateurs give way to marketized professionals. The Internet itself has shifted from non-commercial to highly commercial.

He says that the production costs have gone well down, so we’ll get more production. There should be a market response, not that we’ll go to a non-market environment.

Why adopt economics as a second way of explaining what’s going on? It’s not clear that Yochai is right that the big change in tech will result in a shift to a nonmarket economy. That’s not what happened with the industrial revolution. It’s simpler (Occam’s Razor) to apply the usual economic view that a reduction in costs will lead to an expansion of production and a bigger market, says Peter.

Yochai responds: It’s important not to confuse markets with economics. My claim is exactly that people own the means of production. But the point that the supply curve shifts outward is not inconsistent with what I’m saying. It means the supply of zero-priced goods increases. You’re using the term “market” as a metaphor and a seucrity blankie. You need to include the pricing mechanism. My claim is that the price mechanism is of smaller importance in directing action. If you want to affect action you have to accept that there is a unique system that is outside of the price system. And that’s what I call nonmarket. To claim that I’m not using economics in this book is surprising.

Second (Yochai says), I thought to say that when you change the costs of the physical capital necessary to act in economically significant ways you get changed behaviorial patterns is not technological exceptionalism. It’s like saying the same thing about the steam engine. Costs matter, the combination of physical human etc. capital all matter. One cost component has declined to a point that a whole set of behaviors that were peripheral to the economy are becoming central.

It’s not that the market disappears. Rather, the addition of nonmarket actions adds a degree of freedom that can solve some of the problems of the purely market-based system (Yochai says).

Peter: The amateurs are likely to get professionalized.

Yochai: Could be. But what will the policies be?

Yochai says there’s a wiki at benkler.org to talk about this type of thing…

[Excellent.] [Tags: f2c yochai_benkler peter_swire economics ]

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