Testing the Utilicontributist Model: High Dynamism?

After listening to economist Edmund S. Phelps' Nobel Prize lecture--awesome that they're freely available online--I looked through some of his recent papers, and found discussing capitalism and innovation.

Economic Dynamism and the "Social Market Economy": Are they Reconcilable? October 12th, 2007

Capitalism is therefore a system of disorder – of guesses and huge surprise – alongside some elements of order. It becomes a serious question whether the right ones among the ideas for new products and methods will receive financing and whether they will receive the evaluation and try-out necessary to their widespread adoption. How can this system work?

These basic insights have opened the door to a more realistic view of capitalism. I like to use the word dynamism to mean innovativeness in profitable, thus commercially viable directions. I argue that a well-functioning capitalist system possesses a high degree of dynamism but that requires overcoming difficulties. High dynamism requires not only new commercial ideas.

1st, it requires an abundance of entrepreneurs with the range of abilities needed to push the development of a new idea in spite of unforeseeable hurdles.

2nd, high dynamism requires financiers – angel investors, venture capitalists and so forth – having a diversity of past experience so that many promising ideas are not rejected for lack of a financier with the background needed to understand it (to some extent) and so that the entrepreneur can have a mentor in each of the development stages.

3rd, high dynamism requires managers with the vibrancy to be alert to new methods and the education to evaluate them; and also consumers with the venturesomeness to give new products a look in the shopping mall and to take some of them home to give them a try.

Setting aside critiques of capitalism, let's look at the requirements Phelps sees as necessary for "high dynamism," and how that relates to my evolving proposal for a hybrid socioeconomic system: utilicontributism.

1, a range of skilled entrepreneurs, is readily available. They are secure enough in their livelihoods (if they are not, they only need lower their consumption) to spend time in an enterprise that may or may not be useful to others, and rewarding to them.

2, financiers are readily available for projects that are seen as useful to the public. Projects desired by the public have a pool of demand, and thus, money. Projects outside of known demand can also be funded in ways specific to the type of enterprise proposed, whether by pooling of microloans, an institution extending credit, or any number of other financial instruments. The entrepreneur will still need to be able to explain their idea to others, but with a vested information commons, even if the expertise necessary for analysis is rare, the person is more likely to be in contact with the right people, or have the right people come across the proposal. With equitable wealth distribution, anyone with more money than they pay in use costs can be a financier, whether spread across many projects or just a few.

3, vibrant managers and adventurous consumers, doesn't seem as relevant in the context given, but is still satisfied. Most managers will manage because they have the skills to be entrusted with that responsibility. From a diverse sea of methods will come the most successful "new"--more likely, derivative--ways to do things, selected for their usefulness. Consumers will be more likely to try out consumables that have low use costs associated with them, which is likely to be most. Beta-tests of new products (at least, ones unlikely to be dangerous) will be widespread. Few, if any, products would be launched without some initial public testing and feedback--and subsequent funding, should the product be judged desirable.

This post is hardly rigorous, but the evolving model of utilicontributism should be assessed using as many economic considerations as possible, and--until further investigation suggests otherwise--dynamism should be included.

I do not see high dynamism necessitating capitalism, although Phelps' paper does not make that claim (explicitly). Again, that claim requires a discussion about what capitalism truly is. To avoid that, it might be useful to ask what smaller-scale case studies demonstrate dynamism outside of the venture capital entrepreneurism mentioned by Phelps. Is there a high degree of dynamism in universities with good research programs, or FOSS projects, and how much a role does venture capital play?

My hypothesis is that the needs Phelps assumes venture capital fulfills--facilities, equipment, and the security of a paycheck (piece-of-mind being more important than incentive via amount)--can also be fulfilled in other lower risk, and more beneficial, ways.

Additional literature on innovation needs to be brought together, and I need to do more reading on the background of "dynamism." I remember seeing some studies that assessed innovation in the context of intellectual property which might be a good start.

Value in Services: The Re-discovered Reality of Information

A while ago I read an entry by Kevin Kelly on "generative values," linked on http://blog.p2pfoundation.net. I responded there, but I figure it's worth a post here. Kelly's realization seems silly to me, because it's hardly new. I'd hope his realization would be "in a world of free copies, content creation is a service market." Instead, the wheel is reinvented as Kelly discovers how value is created with services, and categories those values. Anyone who already creates content within a service model (most corporate coder, writers, etc) should already know these (but may not). So should anyone that understands the difference between nonrival and rival goods. I can't entirely blame Kelly though, because it seems like the whole world has been so bombarded with the bogus metaphor of "intellectual property" that seeing information in a different way is startling.

However, I think it's interesting to see why we're going toward a service market in information entirely, so here goes.

We can already see that as distribution costs become near-zero, there are two directions or trends for a society that treats nonrival goods as rival goods, and creative works as property:
1. Restrict technology in an attempt to create artificially high distribution costs.
2. Develop and evolve a service market model for creative (nonrival) work creation.

As expected, we see a mix of these two.

The first is a combination of “old guard” and established interests, particularly corporate interests.

The second is seen in the more technologically savvy, and generally younger generations; they know near-zero distribution cost is the reality and nonrival goods are not “property;” they see artificial scarcity through technological surveillance and restriction as an unjustified smothering of freedom. This oppression is seen as unfair, and reverse psychology comes into play: the harder they are pushed, the harder they push back, going to great lengths and personal risk to fight, undermine, and protest the system.

I think we’re seeing a shift to the creation of these “generative values” by creators, but we also need new compensation models enabled through user/creator-owned “free” commons: what I think of as a “commons agora,” which maintains near-zero cost of value transfer (payment/compensation) and growing layers of metadata that can be mined and used (via searches, categorization, ranking, communities) to connect creators and customers. Complementary development of these components, along with ensuring continual user freedom via GPL-like licensing, should increasingly create wealth and further undermine attempts at technological restriction.

We must also consider who owns the property that enables transmission, and how open the commons can truly be without opening those commons as well. The “old guard,” of course, is already leveraging this control against user freedom, under the euphemism “Quality of Service.”

These trends and general socioeconomic mechanics are why I’m working on describing a socioeconomic model that applies a service economy (sounds funky, I know) to both nonrival and rival goods. I think we’re already headed that direction, but we need to establish human accountability and freedom as a whole before someone dictates it for us.

Advertising is waste.

You'd think that everyone that's ever seen an advertisement would know this, but no one seems to want to say it. We're all thinking it, aren't we?

Advertising, at its root, is waste.

Advertisements are waste.

Right now, we have an arms race between what a person wants to pay attention to and what someone else wants them to pay attention to. The companies competing see that usability rules the day, but they're in a tough spot, because advertisements are poor usability: I should only see what I've asked to see. That arms race continues because the communication lines are privatized. If they were not, if we owned and supported our use of communication lines, advertising would wither, because it has no place. It's not just annoying, it's inefficient. It's waste!

In some commons, companies already have complete monopolies. In other commons, companies have to compete, and they compete by having a bit better usability, being a bit more streamlined, and feigning a commons model. The commons model is the most efficient, so they are inevitably drawn toward it unless or until they can attain a monopoly. That closed, privatized property can never truly be a commons--truly be open and for the public good only--is their fatal flaw. I mean property in the broadest sense: goods that are both property and goods that are not (like information), but are legally treated like property ("intellectual property"). Companies exist for profit, and they'll be tempted to impose on users to gain it. If users were to hold the commons, this would all be irrelevant. Companies would have to provide the service of creation, and everyone would be better off. Google is a for-profit company, and cannot help but be evil, even if they try to stave it off. They are evil by design; their goals are inherently contrary to the public good.

By owning the commons, the public retains control of the purposes of business. The public says "We need this." Today it's backwards, business own the commons and they tell us "You need this." We need their products, we need their services, we need their jobs, we need their vision of ourselves to define our own damn identity.

Enough.

Academics: Open Your Damn Material

A response to this post.

If being “competitive” is the goal, and not communicating ideas, then I suppose trying to find the price point that earns the most money makes sense. Yet, most of that money is still going to the publisher, so the author is hardly being competitive. If making profit is more important than communicating, then I have to wonder why the person is doing research at all; follow Stephen King’s lead, by all means. This may be insulting to some researchers, but tough cookies. Time to wake up.

With sites like http://www.lulu.com , there’s simply no excuse not to make affordable hardcopies, and if a person wants to communicate their ideas, to make free electronic copies. We’re moving to a service model, with the author providing the service of creating content and communicating ideas. Academia is being left in the dust because, generally, they’re so tied to old-guard process that they’re keeping their information walled off. My advice: come out of your silos, or suffocate in them.

There have been numerous studies about the importance of information flow and low barriers of entry in fields of study, that found raising those walls and cutting off that flow stifles innovation and progress. I know this, not because I bought some $100 book, but because I used Google scholar to find and read some excellent research. I came to the same conclusion before reading the research, because it's obvious. It can be seen in OSS, on blogs, and on the internet at large.

What gets more attention? Open access articles. What gets more citations? Open access articles. http://biology.plosjournals.org/perlserv?request=get-document&doi=10.1371/journal.pbio.0040157

People who find themselves in obscurity need to communicate with more people and look at the purpose of their work. Are they trying to solve a problem? Are they trying to reveal insight about something? Are they reinventing the wheel? If so, talk to more people, and look at the ideas you’re presenting. Maybe they’re not easy to understand, and the ideas need to be expressed more clearly. Maybe people can’t see why the ideas are important, and the ideas need context. Maybe the ideas aren’t actually useful to anyone, but that seems unlikely. It’s far more likely that the ideas aren’t a conversation to anyone. They’re sitting out there, all alone, unconnected, and unloved. Markets are conversations.

Is it time for a PLoS Books, like Sam Rose is suggesting? Yes, it’s overdue. Maybe someone’s already working on it.

Being angry at publishers, to me, ignores the whole issue. Are we to be angry when a for-profit business tries to maximize profit? Are we to expect them to do something different because it’s the right thing to do? They’ll only be interested if it generates more profit. They’re middlemen: they’re waste. Publishing is a service, and it can be done in batches, practically on demand (again, www.lulu.com). Trying to reform for-profit business into functioning like non-profits will never work. Better to make them obsolete.

Smothering Purpose by Design

A free person must be able to choose their purpose, to criticize and assess their purpose, and to change their purpose. A person is the core of work, not a task. Purpose is the intent, and function is the role. Purpose and function are discardable. True purpose cannot be created as subordinate to someone else's purpose. True purpose cannot be instilled within the confines of hierarchical control, because decision is absent. A free person who has chosen their purpose and function will perform better than one who has been coerced. A person who cares about what they do because it fits their purpose will do a better job than one who doesn't care.
For example, consider a publicly-traded corporation.

Corporations are institutions with function dictated hierarchically from their purpose, which is profit. The workers providing functions are human beings, and have little sense of purpose. Instead, they work for money, and that is their purpose. When money becomes their purpose, all other motivation is secondary and irrelevant; no matter what the trick, their purpose remains obtaining money.

If money is required for the workers' livelihood, and it usually is, money is the security of that livelihood. Thus, the workers are coerced, their livelihoods held hostage, with fear as their motivation. Fear gets poor results. If money is seen, not as security, but a reward to be gained, their purpose will still be money. An increasing amount of money is needed to sustain the same amount of work, or the amount of work will go down.

On rare occasions a person might find a challenge and decide to take it on. In these scenarios the person works the hardest and best, because they have a purpose. However, here, again, corporations usually fail through their need for hierarchy and control. The person finds their hands tied at some point, struggles, and finally loses momentum. Although this can happen during any challenge, it's assured within corporations, because they maintain hierarchy and control through hand-tying, and sometimes outright sabotage. Why?

Corporations are competitive. They pit person against person for corporate money share, just as corporations fight for market share. Competition necessitates hierarchy. Hierarchy necessitates control.

Corporations attempt to create a sense of purpose, but their purpose remains profit, and so the sense of purpose corporations create is actually just the functions they require for profit disguised. A worker focused on a reward does not have to consider whether their corporate function is noble or useful. A worker focused on survival needs not care about their corporate function at all.

Further, the worth of a worker to the corporation is a function, but to the worker, fulfilling that function is an impediment between them and either financial reward, or livelihood. They dream of being rid of that impediment, playing the lottery, and investing in retirement. What pride is possible for a coerced worker? What change is possible within a system where purpose cannot be freely chosen? Has not labour been kept purposeless by design to the worker, leaving them to suffer and endure their way to the freedom of retirement?

In a corporation, a worker that discards corporate purpose or function discards livelihood; the worker is not useful, and so is discarded. If a worker has purpose aligned with the corporation's goals, the worker remains a function to the corporation. The worker is always discardable by the corporation; it cannot be any other way. No wonder that workers feel discardable, then: they are. Some may say this is just. The corporation is giving them a chance to live! Has society provided better options? To fulfill some need they see in society, or even their neighborhood, they need startup capital, which they can't get. The person in submission can either admit that they're being controlled, or they can try to justify it as a trade-off that provides security. There is a corollary to Benjamin Franklin's old chestnut about sacrificing liberty for security:

Submission cannot earn freedom, it can only beg for it;

This is the reality of any hierarchical organization that restricts human freedom, whether state, corporation, or church.

If we do something that is necessary to live, it does not smother a sense of purpose; the more unpleasant we find it, the more likely we are to look for ways to do it more easily, or not at all. We would rather have an enjoyable purpose, and so humans over time have developed technology and culture that makes living easier. However, some have made living easier through the coercion and manipulation of others, and one of the most fundamental goals of any society should be to eliminate this immoral inequity. We evolved to punish cheaters; it was necessary for survival. The strategy is simple: tit for tat.

In today's society we all find it hard to punish cheaters. They run the place.

My proposal is that we band together, cut them out, give them tit for tat. This doesn't require long hair, tie-dye, or a red banner. It doesn't require violence, and in fact, violence is counterproductive: violence is the most barbaric form of oppression. It doesn't require reform: does asking a cheater to cheat less make sense?

Banding together requires coordination and cooperation. We create organizations that enable freedom through democracy. We build, in a parallel system, inherent and passive features that select against cheating. Cheating is obvious and isolated. Cheating sticks out like a sore thumb. The bigger the cheating or cheater, the more obvious they are.

We change business. Profit becomes an investment in the people and the purpose. We work for purposes we personally believe in, and play roles for which we personally understand the need. Leaders rise to the occasion where they are needed, when they are needed. We build it where ever we can, on land, or in bits. We network against the cheaters, but provide an offer: stop cheating, agree to the fair terms we all honor, and you can join us; the offer will be open when you decide to step out of the cold.