The Free Economy #1

Just the other day I was watching a talk by Professor Lessig, here: http://www.youtube.com/watch?v=hzFEbm1C0yU&feature=related . It’s known for being the speech where he said he’s done with the whole free culture thing, and is moving on to other stuff. Sad, but you really do have to live your own life, and his current much more partisan work does seem to be very constructive. I’m an unabashed fan of the man.

But what I’m more interested in talking about here is the concept of the Sharing Economy which is largely what Professor Lessig talks about in this speech. He talks about a Sharing Economy, and a Commercial Economy, as distinct entities. We live in both, but while the commercial economy is dominated by money, the sharing economy doesn’t use money. In the talk, Professor Lessig says “money is not just absent or rare, it is poison in these economies”. (The plural here refers to the idea that there is no single sharing economy, but many separate overlapping economies, for which it is an umbrella term).

The sharing economies include all kinds of volunteerism, the reciprocity economy at work inside small groups such as families, and any other environments of exchange which don’t use money. A subset of this is something not new under the sun, but which feels very new to us, which I will call the Free Economy.

What is the Free Economy?

The Free Economy is an economy of free things. It is distinct from the rest of the Sharing economy because what it trades in are non-scarce goods. Currently it is almost exclusively an information economy, because modern information technology has reduced the cost of copying to be free, or practically free, for many people (practically free because someone still pays infrastructure costs, ie: PCs, internet access, etc).

The Free Economy breaks into two parts, the formal and the informal. The Formal is that which is explicitly free. The Informal is that which is explicitly not free, but in fact behaves as though it were.

The content in the Formal Free Economy consists of that explicitly freed by its creators, using the Public Domain, or any of the multitude of Free licenses (the software licenses such as GPL, BSD, MIT, the creative commons licenses, etc). These licenses vary quite widely, largely around their interface with the commercial economy, but they are almost entirely unrestricted in the sharing economy (save perhaps attribution requirements, which is a relatively minor quibble, and possibly with the exception of the No Derivative Works subset of the Creative Commons licenses).

The content in the Informal Free Economy consists of that which has not been freed (in many cases explicitly not), but is behaving as though it is free. This is the body of commercial work which is currently traded amongst the participants in the informal free economy, as well as those works which fall outside of the Formal Free Economy simply because their creators never made a decision either way, and the default legal position is that they are not free. Here you are thinking of commercial movies and games available via the BitTorrent protocol, as well as the entire 1980’s world video clip back catalog on YouTube.

I am interested in the Free Economy because I see it as a good future for the world.

Other types of organisation

All the types of possible large scale economic organization I can think of (command economy, market economy, gift economy  http://en.wikipedia.org/wiki/Gift_economy, anything else important missing?) implicitly assume we are dealing with scarcity. Whether they worship scarcity or try to ameliorate it, that is their fundamental underpinning. Even a gift economy lives in a scarce world, attempting to encourage and use high trust social interactions and altruistic values to manage it.

The Free Economy is something different, because it is dealing with the explicitly non-scarce. It doesn’t really say very much, except that we should treat that which is not scarce as not scarce. Which, in fact, appears to be entirely controversial.

It is controversial because of the dominance of the market economy on our thinking. Under the capitalist world economic system, we don’t just adhere to commercial exchange as a necessity for managing scarce goods. Instead, we have internalised it as our personal value system, and this is incredibly pervasive. For evidence of this, you can see the shrinking of the sharing economy, which has been coexisting with the commercial economy all along. Volunteerism declines, and the service economy grows. What is the service economy? It is the act of performing a service for someone for money. So it includes serving someone coffee in a cafe, but doesn’t include delivering Meals on Wheels to the infirm. Volunteering is increasingly seen, I think, as something for those unfit to participate in the commercial economy; those on unemployment benefits, the aged pension, etc. The characterization of a full time able bodied volunteer as “unemployed” says something interesting about our attitudes.

The commercial economy impinges on parts of our lives that were never commercial before. We eat out more than we ever used to, we outsource all kinds of domestic jobs, we spend more on transport to travel further faster, because we work more than we used to, so we don’t have as much time for unpaid things. Why? Because without working more, we can’t afford these things. Really it’s a straight swap, the same or similar things end up being done (or some things don’t, but we forget we needed them), money changes hands where once it didn’t, the economy grows. That is, the commercial economy grows. But does the sum of the commercial economy and the sharing economies grow? I don’t think anyone knows. I suspect that it doesn’t.

I like to grumble about the commercial economy a lot, and I must come back a little from it here. The fundamental premise of the commercial economy is that there is scarcity, and it must be managed. That’s pretty likely true. That the commercial economy achieves this in a just way is questionable. It purports to be an efficient way, although by its own definition of efficient. What it does appear to do is to scale well, which doesn’t appear to be true for command economies and is fairly clearly false for gift economies.

However, it’s very difficult to regard it, at best, as anything more than a necessary evil. It encourages hierarchy, it encourages growing disparity in access to resources, and it forces us all to keep out primary focus not on the stuff of human greatness, but on the artificial and somewhat absurd task of making money. It is probably the best system for managing scarce resources in a low trust environment, but I think it encourages and reinforces low trust, making it very difficult for us to reach any higher.

Something I need to research: I suspect very strongly that we currently produce enough to meet the basic needs of humanity with a small fraction of our activity. I think the rest of our activity is largely a tail chasing exercise, producing things or services which will encourage the exchange of money but have little other benefit. We work increasing hours and there is a lot of sound and fury, but what if anything is it signifying? Yet it is very difficult for the individual to opt out of this exercise; we all have to eat.

——

This wasn’t going to be a multi-part post, but it’s gotten quite long. So in part 2, I’ll talk about how the Free Economy and the Commercial Economy look when viewed through each others lenses, about how they can coexist, about the power of values, about what kind of society we could live in if we set our minds to the task, and about how we might get there from here.

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The Free Economy #1

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