THE RIVALROUS VS THE NON RIVALROUS
EPISODE 2 MUSIC IN PHASE SPACE:
Aristotle directly addressed the role of people in a hypothetical high-tech world: If every instrument could accomplish its own work, obeying or anticipating the will of others, without a hand to guide them, chief workmen would not want servants, nor masters slaves.
At this ancient date, a number of possibilities were at least slightly visible to Aristotle’s imagination. One was that the human condition was in part a function of what machines could not do. Another was that it was possible to imagine, at least hypothetically, that machines could do more. The synthesis was also conceived:
Better machines could free and elevate people, even slaves.
There’s an old Japanese tale about a confrontation between some samurai and some Zen monks. The samurai then asserted that they were more important because they defended the frontier. The monks replied that while the samurai did indeed defend the physical frontier, they were defending the moral frontier.
Although in Homeric verse, “kleos,” ( i.e., fame or honor ) was a big deal. To be sung about by bards. There are Welsh myths in which bards threaten kings with disparagement, and the kings quiver. Many of our WWII generals had kleos. Eg., Patton. The Nobel Prize provides kleos as does the Olympic Gold. People Magazine does not. Strip a man of kleos and you are picking a fight.
HOW MUSIC BECAME A PUBLIC GOOD
Public goods are defined as Non-exclusionary. They can be used by everyone, including those who don’t pay. Also they are Non-rivalrous which means one person’s consumption does not reduce a good’s usefulness to others. Overall, Maybe we would agree that music is non-rival but I’m not so sure it qualifies as non-excludable (in other words, I do think copyright law could be enforced to the point where music would be more protected than not). Transfer of intellectual property to those unrelated to the inventors is like injecting meth. Short term euphoria and long-term doom.
Let’s take money – the original abstract information system for managing human affairs – as an example. It might be tempting to print your own money, or, if you’re the government, to print an excessiveamount of it. And yet smart people choose not to do either of these things. It is a common assertion that if you copy a digital music file, you haven’t destroyed the original, so nothing was stolen. The same thing could be said if you hacked into a bank and just added money to your online account. (Or, for that matter, when traders in exotic securities made bets on stupendous transactions of arbitrary magnitudes, leading to the global economic meltdown in 2008.)
The problem in each case is not that you stole from a specific person but that you undermined the artificial scarcities that allow the economy to function. In the same way, creative expression on the internet will benefit from a social contract that imposes a modest degree of artificial scarcity on information.
A next problem is that software replaces physical objects by small computer files. Such files have the twin attributes of what money-flow experts call public goods: The good must be unlimited (my use doesn’t prevent your use or reuse). The good must be non-excludable (the existence of the good means that everyone can benefit from it even if they do not pay for it).
So if the digital economy has transformed music from a product into a public good. Moore’s Law means that more and more things can be done practically for free, if only it weren’t for those people who want to be paid. People are the flies in Moore’s Law’s ointment. When machines get incredibly cheap to run, people seem correspondingly expensive. It used to be that printing presses were expensive, so paying newspaper reporters seemed like a natural expense to fill the pages.
When the news became free, that anyone would want to be paid at all started to seem unreasonable. Moore’s Law can make salaries – and social safety nets – seem like unjustifiable luxuries.
To understand the problem, recall that in previous times in history inventions of new things created high value occupations by automating or eliminating those of lower value. This led to a heuristic that those who fear invention of new things do so because of a failure to appreciate newer opportunities. Software, however is different
Computer programs, like life itself, can be explained into two types:
1) Loops which repeat with small differences/different versions.
2) Rube Goldberg like processes which happen once.
If you randomly pause a computer program, you will probably land in the former because the repeating elements are what gives software its power. Unfortunately, our skilled musicians and professional jobbers look more like the former than the latter just mentioned, which puts artists in the crosshairs of what software does brilliantly. In short, what today’s flexible software is threatening is to “free” us from the drudgery of all repetitive tasks rather than those of lowest value, pushing us away from expertise
Musical recording was a mechanical process until it wasn’t, and became a network service. At one time, a factory stamped out musical discs and trucks delivered them to retail stores where salespeople sold them. While that system has not been entirely destroyed, it is certainly more common to simply receive music instantly over a network. There used to be a substantial middle- class population supported by the recording industry, but no more. The principal beneficiaries of the digital music business are the operators of network services that mostly give away the music in exchange for gathering data to improve those dossiers and software models of each person.
This shift in emphasis from jobs to opportunities is great news for a tiny number of creatives of today, but deeply troubling for a majority who depend on stable and cyclical work to feed families. The opportunities of the future should be many and lavishly rewarded, but it is unlikely that they will ever return in the form of stable jobs.
The notion that the dominant paradigm — that of rival goods induced scarcity as the underlying conditions of economic behavior — is a persistent habit of the mind creates an intellectual inertia we haven’t been able to shake off; In order to figure out how to use non-rival goods in our economy we cram them into that preexisting framework by using IP to create artificial scarcity, rather than letting a new paradigm develop.
This is not sustainable.
THE GIFT ECONOMY
In 2006 YouTube only had 60 employees, but it was managing 100 million videos. Millions of people around the world were donating their videos to YouTube. If a Hollywood studio had decided to create 100 million videos, it would have had to hire hundreds of thousands of people to act them, direct them, produce them, edit them, and upload them.
A newspaper handling the same amount of advertisements that Craigslist would have to hire hundreds of editors. A magazine that decided to create a a similar repository of pictures than Flickr would have to hire thousands of photographers, tour guides and editors.
Any telecom in the world that provided a comparable service than Skype’s 200 employees employed tens of thousands of technicians, operators, accountants, etc.
One of the fundamental discoveries of the “new medium” is that users of the Web around the world are happy to contribute content for free to websites willing to accept it. Millions of people work to upload content to Wikipedia, Facebook, Twitter, Flickr and YouTube for free. They are working, but they are not employed: they work for free, out of their own will.
The Web has created a broad new class of knowledge workers: volunteer amateur editors. Their net effect is to displace existing knowledge workers, including journalists, writers, librarians, musicians. When thousands of knowledge workers lose their jobs, this ultimately has effects on the economy as a whole and causes more unemployment ripples. Every time someone adds a line to Wikipedia, a worker with professional knowledge becomes less valuable and more redundant.
In the past each wave of technological innovation came with a wave of new jobs that replaced the old ones. Each wave of progress typically created new opportunities for knowledge workers. This class expanded rapidly, creating more (not less) employment (and higher incomes). There are now millions of people making videos instead of just a few thousands. The difference is that they don’t ask to be paid: they do it for free. Businesses can operate with a minimal staff as the old knowledge workers are replaced by free labor.
It is an illusion that YouTube is run by only a handful of employees: YouTube “employs” millions of “employees”. It just so happens that 99% of them are happy to work (provide content) for free.
Protectionists complain that developing countries are “dumping” cheap products on the USA market, which cause USA companies to go out of business. Nothing kills jobs faster and more permanently than free labor. That is a form of competition that comes from inside. That is a form of competition that comes from inside the USA society, an accidental by-product of technological progress.
The net economy has created production tools that are available for free to everybody. That is precisely Marx’s definition of socialism: the collective ownership of the means of production. This accidental by-product is also the dream of the hippy utopians of the San Francisco Bay Area. Stewart Brand of the WELL imagined a virtual community of people engaged in the free production and exchange of knowledge goods.
The Internet did democratize society: everybody can now start their own business. The problem is that the Internet also democratized knowledge production. Web-based tools available to build, run and monetize a business that only require limited technical skills and no more than a few days of work. One person alone can de facto create an assembly line entirely on the Web to produce a mass-market product/service (in the same category as YouTube, Flickr and Craigslist) That assembly line does not employ any worker other than the founders who assembled it. Once the one-person business is up and running, its success only depends on how many people are willing to contribute content for free, i.e. how much free labor you can harvest.
Winner-take-all distributions come about when there is a global sorting of people within a single framework. Is there anything wrong with winner-take-all outcomes? Don’t they just promote the best of everything for the benefit of everyone?
Winner-take-all contests are beneficial to the sciences to have special prizes like the Nobel Prize. But broader forms of reward like academic tenure and research grants are vastly more beneficial. Winner-take-all contests should be the cherry on top in an economy. To rely on them is a mistake — pragmatic, ethical, but also a mathematical one.
A star system is just a way of packaging a bell curve. It presents the same information using a different design principle. Winner-take-all star systems amplify errors and make outcomes less meaningful. Distributions can only be based on measurements, but as in the case of measuring intelligence, the nature of measurement is often complicated and troubled by ambiguities.
Consider the problem of noise vs signal. All rituals in which an anointed individual will suddenly become rich and famous winner-take-all. A different shade of makeup would have turned the tables. And yet the rewards of winning and losing are vastly different.
While you might have aesthetic or ethical objections to winner-take-all outcomes, a mathematical problem with them is that noise is amplified. It will become less reality-based.
When we have a bell curve distribution instead of as a winner-take-all distribution, then noise, is not amplified. It makes sense to talk about average intelligence or high intelligence, but not to identify the single most intelligent person to design the successor of a 787
Star systems come about because of poor sorting processes. If there are only five contests for stars, and only room for five of each kind of star, then there can only be twenty-five stars total.
Top players are rewarded tremendously while almost everyone else starves.
To get a bell curve of outcomes there must be a variety of paths, or sorting processes, that can lead to success. a particular person might enjoy a commercial advantage because of being in a particular place or having special access to some valuable information
A local player could deliver live music readily than a distant manufactured band, even if it was cheaper, and a local promoter could discern who was likely to bring a lot of people if properly supported
Each person who found success in a market economy was a local star. Digital networks have been mostly applied to reduce benefits of locality, and that will lead to economic implosion (see musicians)
The economic beneficiary would i someone owning a distant large computer that spied on everyone in order to route advertisements to them.
The clusterfuck of a hyperefficient market optimized to yield star-system results is that it will not create enough of a middle class to support a real market dynamic. Factories must have multitudes of customers. Banks must have multitudes of reliable borrowers.
Even if factories and banks are made obsolete — the underlying principle will still apply.
Henry Ford made a point of pricing his cars so that his own factory workers could afford to buy them. It is that balance that creates economic growth, and thus opportunity for more wealth
Before digital, technological development often favored winner-take-all results. railroad barons; oil barons. Capital resisted rising up into a middle class mountain. To combat the degradations of star systems, levees” arose to compensate Thermodynamics and protect the middle
Levees modestly hold back Thermodynamics to protect something precious. Middle-class levees came in many forms. government-based levees, though the ability to pay for social safety nets is now strained by austerity measures taken to alleviate too big to fail in 2008.
Some levees were pseudo governmental. tax policy to encourage middle-class investment in homes and retirement accounts.
There were also hard-won levees : academic tenure, union membership, taxi medallion ownership, licenses, copyrights, patents, and more.
Industries arose to sell middle-class levees, like insurance.
None of these are perfect nor sufficed in isolation. A successful middle-class life typically relied on more than one form of levee. And yet without these exceptions the open flow of capital, could have not thrived
Technologies are never perfect. They always need tweaks.
Markets are an information technology. A technology is useless if
it can’t be tweaked. If market technology can’t be fully automatic and needs some “buttons,” then there’s no use in trying to pretend otherwise.
Fix the bugs bugs! taxpayer-funded bailouts of networked finance, and no amount of austerity seems enough to pay for that. So we tweak technology. (It shows a commitment to it)
Please don’t pretend there’s some “pure” form of capitalism we
should be faithful to. There isn’t. Very few rich people are big earners. There are a few in sports or entertainment, but they are anomalies,
Rich people typically earn money from capital. They have invested in real estate, stocks, or more rarefied opportunities, and money sloughs out of those positions. How to create a less ad hoc, more organic, middle-class-sustaining form of wealth, as opposed to mere income.
The ideal mechanism would reward creativity, and nonetheless be tough enough to withstand thermodynamics which will surely appear. We can survive if we only destroy the middle classes of musicians, journalists, and film makers. What is not survivable is the additional destruction of the middle classes in transportation, manufacturing, energy, office work, education, and health care. And all that destruction will come surely enough if the dominant idea of an information economy isn’t improved.
However, in the long term, this way of using network technology is not even good for the richest and most powerful players, because their ultimate source of wealth can only be a growing economy.
So long as public goods make up a minority of a market economy, taxes on non-public goods can be used to pay for the exception where price and value gap And record companies and the Broadcast publishing official statistics will be under increased pressure to keep up the illusion that the music Industry is recovering by manipulating whatever dials can be turned by law or fiat, giving birth to an interim “gimmick economy”.
An economy where we sell each other PDF’s or MP3’s is no more viable that the debt based on we have now. (Banks create money by issuing loans) And while yes, new jobs will be created they won’t be able to make up for the massive efficiency driven job losses.
A NEW SOCIAL CONTRACT
When a social contract works, you recognize that what’s good for others is ultimately good for you, too, even if it might not seem so at a particular moment. In a particular moment, having to pay for something might not seem so good for you. Ultimately, being paid by other people as part of the deal more than makes up for the initial sacrifice. That also means you empathize with the needs of those who sell to you, because you sometimes play the role of seller.
Right now it might seem draconian to charge for access to information we have come to expect for free, but it would feel very different if you knew that other people were also paying you at the same time for information services you have fractionally contributed to in the course of your life.”
“This is the only way that democracy and capitalism can be in alignment. The current online commerce models create a new kind of class division between full economic participants and partial economic participants. That means that there isn’t enough shared economic interest to support long-term democracy.
Any society that is composed of real biological people has to succeed at providing a balance to the frustrations of biological reality. There must be economic dignity, defined here as knowing you won’t fall off a cliff into abject poverty if you get sick, become a parent, or grow old.
If we demand that everyone turn into a freelancer, then we will all eventually pay an untenable price in heartbreak. Most people won’t be able to pull freelancing off through the contingencies of a lifetime. We need those levees, not because we’re lazy, but because we are real. When enough people lack economic dignity, there’s no way for the economy overall to function well. Even those who are reasonably successful on ”
If we could show Aristotle the technology of our times, I wonder what he would make of the problem of unemployment. Would he take Marx’s position that better machines create an obligation (to be carried out by political bodies) to provide care and dignity to people who no longer need to work? Or would Aristotle say, “Kick the unneeded ones out of town. The polis is only for the people who own the machines, or do what machines still cannot do.” Would he stand by idly as Athens was eventually depopulated?
I’d like to think the best of Aristotle, and assume he would realize that both choices are bogus; machine autonomy is nothing but theater. Information needn’t be thought of as a freestanding thing, but rather as a human product. It is entirely legitimate to understand that people are still needed and valuable even when the loom can run without human muscle power. It is still running on human thought.
Aristotle was recalling Homer’s account of the god Hephaestus’s robotic servant creations. They were nerd’s delights: golden, female, and servile. It reads as if people would wait around for the gods to gift some of us with automata so that we wouldn’t have to pay others. That sounds so early 21st century to my ears. The artificial intelligence in the server gifts us with automation so we don’t need to pay each other.
Aristotle seems to want to escape the burden of accommodating lesser people. His quote about self-operating lutes and looms could be interpreted as a daydream that better technology will free us to some degree from having to deal with one another.
It’s not as if everyone wanted to be closer to all of humanity when cities first formed. Athens was a necessity first, and a luxury second. No one wants to accommodate the diversity of strangers. People deal with each other politically because the material advantages are compelling. We find relative safety and sustenance in numbers. Agriculture and armies happened to work better as those enterprises got bigger, and cities built walls.
But in Aristotle’s words you get a taste of what a nuisance it can be to accommodate others. Something was lost with the advent of the polis, and we still dream of getting it back.
In every case, however, abundance without politics was an illusion that could only be sustained in temporary bubbles, supported by armies. The ghosts of the losers haunt every acre of easy abundance. The greatest beneficiaries of civilization use all their power to create a temporary illusion of freedom from politics. The rich live behind gates, not just to protect themselves, but to pretend to not need anyone else, if only for a moment. In Aristotle’s quote, we find the earliest glimmer of the hope that technological advancement could replace territorial conquest as a way of implementing an insulating bubble around a person.