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Whenever topics of digital business models come up, my default culture war angle is:
This is just a further demonstration that capitalism as currently practiced is not a viable economic method for humanities far future, because it relies on scarcity to set prices through supply and demand, and actual abundance causes it to short circuit in ways that create all kinds of stupid schemes designed to produce and defend artificial scarcity.
Capitalism should remain our default for things that are actually necessarily scarce, but as we increase productivity and move to digital realms that will cover less and less of what we care about day-to-day, so we have to actually come up with an alternate method for handling the creation and distribution of those types of goods.
And we need to not be allergic to that discussion just because 'that's communism and communism killed a trillion people' or w/e.
Sound like you are throwing the baby out with the bathwater.
Private ownership and free markets are great, and they work just fine in digital spaces.
The important part of those institutions is that they encourage useful forms of production (its not that there is zero waste in production, but of all the economic systems that have been tried, capitalism seems to kick ass at efficient allocation of scarce resources). And even though digital goods have very low or nearly zero marginal cost for production, that is not their total cost of production. If producers aren't getting paid for total cost of production than they aren't making things.
Communism gets labelled as killing a bunch of people, mainly because it was such a crappy economic system. I'm not sure if Stalin or Mao entirely meant to kill tens of millions of their own people. But the lack of productivity from their farming systems meant that was not enough food to feed everyone.
The problem with turning digital assets into communal property is you'd likely kill a bunch of incentives to create digital goods. And yes, right now there are plenty of open source projects where skilled developers contribute to projects for no monetary incentives. BUT many of these developers also have jobs at the companies that do sell software. The existence of a bunch of people with engineering and programming skills is probably directly attributable to the fact that a bunch of companies pay top dollar for this skillset. And they pay top dollar, because they can make top dollar on selling the products.
If you kill the incentive to make software products, you kill the companies that hire lots of developers, that kills the incentive to train and create new developers, that kills the open source software movement. We could probably coast for a generation on current levels of talent. But it would absolutely start falling apart. Especially all the boring software projects that make gobs of money but no one actually enjoys doing.
Right, which is why I didn't say we should just move to communism and communal property.
I said we need to come up with a new system that accounts for all these problems (the problem of financially disentangling scarce invention and abundant production, such that we can incentivize invention without relying on artificial scarcity).
And my point was that conversations about trying to come up with that new system are often derailed, because anyone who criticizes capitalism and talks about the need for a new system, tends to get tarred as a communist and ignored.
Admittedly, I could have spent more words explaining that part, I just get worried there's a maximum comment length before people start skimming.
Here is as example of a new system that almost certainly wouldn't work, but shows the types of ideas you could discuss... The government measures how much people spend on all digital entertainment products today, and creates a new tax in that amount. Anyone in the country can download and enjoy any digital entertainment they want, for free, at any time. The revenue from the tax gets split among all digital creators proportionally to how many times their product was downloaded, with some type of pro-rating for how long the experience is or how long it should take to produce or etc., details to be worked out by hypothetical domain-expert philosopher kings.
Again, lots of obvious problems with that idea, it's not the one we'd end up on. But it might still be actually better than the current system of artificial scarcity plus rampant piracy, because I think that model is really really bad, and actually deadly when we look at things like medications that cost pennies to produce and billions to invent.
(and note that these types of artificial scarcity goods also include basically all educational materials productivity software from CAD to Photoshop, industrial secrets to improve production or product quality, etc... lots of things that could be shared freely and would massively improve the world if they were, if we just came up with a way to still incentivize their creation)
Ultimately what I'm really fighting here is capitalist realism - the cognitive bias that, because capitalism is what we do have and because it works better than some other systems we have examples of, it must be the only possible system that could be functional and good. I think capitalism (well, free markets, we don't really need the separate capitalist class) is pretty great, but I don't think it's the final form of human endeavor and I don't think it's teh best we can do across every domain and in every situation no matter what. I don't think it's bad, I just have loftier ambitions.
I'm ready and willing to have a conversation about alternative forms of economic organization. It doesn't mean I won't criticize those ideas. I think you are wasting energy complaining about how a conversation can't be had, when you could instead just be having the conversation you claim can't be had.
I know you admit there are problems with this, but there are a class of problems that are very important to point out. Practical and implementation issues can often be ignored at first. But one thing that can't be ignored are incentive issues.
When communism first came around everyone was very focused on the technical problems. Like "what is the best way to communally run a farm in the interests of the workers". But they ignored glaring incentive problems like "who gets rewarded for well run farms, and punished for poorly run farms?"
I think your proposal has an incentives disconnect. You are vaguely trying to connect the two through downloads and other proxy measurements. I know you are reluctant to bring up communism, but I have to because this type of proposal is exactly what communist Russia went through. We have historical examples of a country trying to run industries based on some measurements of what is useful about that industry. And the problem with this type of system is so common that it gets a name: GoodHart's Law "When a measure becomes a target, it ceases to be a good measure".
The other incentives disconnect is in thinking that philosopher kings exist. They don't. Real people will be involved in this system. And real people are subject to capture. What happens when the guy in charge of figuring out the measurements owes a favor to someone that would benefit from a change in how the measurements work? This kind of regulatory capture happens so often in the US government. Its not even explicitly corruption. Its just humans being humans. Former regulators get jobs at firms, and then talk with their regulator buddies still working at the regulatory body. It happened plenty in the Soviet System to the point where unless you were a well connected Communist Party insider you would get fucked over by all the other insiders changing the rules, or selectively applying the rules to benefit each other.
The best way to figure out how much someone values something is to ask them how much they want it relative to other resources. Money is a technology for accomplishing this calculation. If the "philsopher-kings" existed and were actually competent I believe they would just exactly recreate money and artificial scarcity. Would you consider the system a failure if it just exactly recreated what we currently have?
I don't think free markets work as well without ownership. I am familiar with many different kinds of economic systems. It is my area of interest and study. If there is a new idea about how economic distribution can work, I'd be very interested to hear. The vague outline of what you proposed is not new though. Its central economic planning. It is often associated with communism, but the Western "capitalist" nations experimented with it as well. It tends to fail outside of niche uses. For rather straightforward reasons, some of which I outlined above:
If you are looking for entirely new economic systems, reading Robin Hanson is your best bet. Most people I've talked with that don't like capitalism and try to come up with something else ultimately just reinvent some form of communism, socialism, or central planning. Capitalism is not the default because people like it. Almost everyone hates capitalism. Its the default because every other idea that seemed even slightly plausible has been tried, and many of them have failed horribly. Its the default because the country that sort of stuck with it and gave it some lip service, did way better than all the countries that said "lets try something else".
So let me start by saying why I do actually think it's very important to litigate whether such a discussion can be had and how it should be had. The reason being that I don't expect anyone on this forum to be the type of world-class expert who could invent an actually workable new system, nor to have the influence and following to get it implemented if they did. We can certainly discuss such thing for fun, but I wouldn't expect them to lead anywhere.
On the other hand, I do think the members of this forum (and similar ones all over the place) have slightly more collective ability to influence discussion norms and memetic patterns around these types of issues. Not much, certainly, I don't think we're going to change the world just because we decide that one type of discussion should be more legitimized and taken more seriously. But I do think we're a lot more likely to be one useful drop in that particular tidal wave of changing the discussion norms to a place needed for a solution to be found, than to be useful in the process of actually discovering and promoting the next economic model the world ends up using.
And I think your response here does somewhat demonstrate the problem with the discussion that I'm trying to call out here. Any mention of government involvement gets rounded off to central planning, any questioning of the capitalist class gets rounded off to no private property, everything gets lumped into the category of communism, the whole thing is dismissed because communism never works in practice.
I think these are in large part cached responses, which get in the way of fairly considering my (admittedly bad and poorly thought out!) proposal. I think they get in the way of discussing actual good proposals, too.
In detail:
I feel this is kind of unfair to my proposal: the proxy measure I suggest is people actually voluntarily using the thing, which is pretty much how markets work already.
I agree that you can get into Goodhart's law problems if you distribute money based on how many people use/want a thing, but I think they're pretty much the exact same problems you have in current capitalist markets; see the Marvel supremacy, and other trash popular culture.
I agree that price discovery is the best way we have to fairly distribute economic incentives and resources. The problem I'm trying to solve is how to do that without artificial scarcity.
My proposal here was that instead of using money as the scarce resource that people allocate among alternative, we use their time. Entertainment already works this way in practice: more is produced than anyone could ever consume, people decide what to spend their limited free time on. People deciding what to spend their scarce leisure time on is fairly isomorphic to people deciding what to spend their scarce money on; I think you would find the same types of price discovery in such a system.
And I don't think that's really anything like 'central planning'.
And I didn't say no private ownership of anything, I said no capitalists. This was just a parenthetical not really related to my proposal, so I'll explain more:
I think price discovery through free and competitive markets is a great piece of social technology, which I've already said we should keep in place for all scarce resources.
I don't buy that such a market system requires a separate ruling class of capitalists who own the means of production, while everyone else has to sell their labor to those people to survive.
I think you could have an equally efficient free market economy where everyone owned (individually or in partnerships) the means of production for whatever they produce, where they did not work for anyone else and their labor was not alienated, but where they still produced goods under their own direction to sell on the market.
I think the fact that we call competitive free markets (or sometimes, just any type of trading general!) 'capitalism' is basically the result of very successful propaganda efforts by the capitalists elites, intended to make us identify them personally with all our economic success. I think that's a motivated narrative that has much more to do with politics and power relations than it has to do with economics, and I don't think it's actually true.
I think free markets are the powerhouse here, and the capitalist ruling class are basically riding its coattails and not contributing much.
First of all, there was a time when feudalism was the best possible economic system, way more productive than anything else anyone had tried. We're not at the end of history yet, there's no reason to think the future can't come up with more improvements just like the past did. And I'm saying that all these appeals to past failures are slowing down that process.
Second, I'm talking about how to efficiently distribute digital goods. No kidding no countries in the 1600s or 1800s or 1950s came up with a good solution for that problem, it didn't exist at the time.
Again, this demonstrates why I think the tendency to round everything off to communism gets in the way of actually discussing the topic at hand.
This is snobbery.
As is most of what we talk about here.
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Its all for fun around here. We take the fun a little seriously though, and have discussion norms and rules.
I am not trying to be dismissive. But I was only given so much to go off of. And what you wrote sounds explicitly like central planning. I think you'd be frustrated with me if I said we are going to talk about free markets and private ownership, but only as they theoretically exist, and that you bringing up real world examples of capitalism is just you being dismissive. I also believe I kept my criticisms generally theoretical. The one point where I dipped into the practical was to disagree with your claim that the system you proposed is new or novel.
There are people who say "communism sounds nice in theory, but it doesn't work in practice". I am not one of those people. I say communism fails in theory. Central planning fails in theory. The theory of how it fails was predicted before they were ever tried. The people who claimed it would fail in theory lost the intellectual debate in the early 1900's. And countries went on to try those things anyways. And then they failed in practice as well.
I am happy to stick purely to theoretical discussions. As you said and I agreed, this is a discussion for fun, and getting bogged down in historical fights is usually not as fun for me, and much more of a time sink.
Its similar, and the differences are subtle. But those subtle differences are very important.
I'm not 100% sure I follow the point you are making here. But I would say to keep in mind that the system you proposed sounds like it might be a fixed allocation. Like collect $1 billion in taxes and distribute that among the software makers. But markets are not fixed allocation. Everyone could get sick of Marvel movies and stop going to watch them tomorrow, and they just spend their money on something completely different. People could get sick of computers and go outside to touch some grass.
You are right, in the new digital world this proposal might not end up being central planning. This sort of thing was impossible before. So you had people whose job it was to figure out which products were needed, and then they'd go tell producers what was needed. These ended up being the central planners.
I think there are two scenarios where your proposal ends up being central planning anyways:
I have to let the real world for a minute. Most Americans are capitalists. About 53% own stocks in a corporation. Most Americans are also workers who sell their labor to someone else. Thinking of these as two separate classes often feels a little outdated to me. I suppose in Marx's time it might have made sense to have this division. It doesn't really make sense anymore.
Having to work to survive is the default state of humanity. Tribal people 10k years ago didn't just lay around all day and have food drop out of the sky onto their laps. They worked.
There is a small class of people that does not have to work to survive. That group has been growing as the total amount of wealth in our society has increased. I get the impulse to say 'thats not fair, distribute it so we all don't have to work'. But the raw numbers just don't work out. There isn't enough money among rich people. Even if you said "screw the rest of the world" there isn't even enough money among the American rich to lift the American poor permanently out of poverty. Probably at the point it is possible it won't be necessary.
I would personally hate this, for multiple reasons:
The first and third reason are also reasons why a lot of people shouldn't like that kind of system. The second reason might really excite some and scare off others. Depends on how you feel when you hear the term "office politics". If it fills you with dread, then this system would be far worse.
Investing capital into useful and productive endeavors is not easy. If you think it is, you must be filthy rich from the stock market.
And the alternative to investing money is consuming it. I almost feel like we've pulled a giant con on the economic elite. We've convinced them that the number in their bank account matters more for their social standing than any kind of actual spending. With the kind of wealth that billionaires have to thrown around, they could be spending it on much more ridiculous things. Trump kinda makes the most sense to me. He had vanity projects, stuck his name on high class but low profitability things like golf courses, used his wealth to stroke his ego on TV, and then used it to run for office and acquire power that wasn't limited by what could merely be purchased. But Trump is not the norm for the ultra wealthy. Many of them hide away, live relatively modestly, and just quietly re-invest the money. And then they pass away leaving the money to their kids who don't have to work for one or two generations.
Again though, most Americans are capitalists and workers. It is ridiculously easy to be a capitalist in America. And it makes sense, capital markets are awesome. Instead of only getting to keep what I earn from work, I can be frugal and have my wealth grow itself. Yes, very people get access to it as well.
I kinda get the point, but also its wrong. Feudalism was a stable political system in Europe, it wasn't necessarily super productive. But even within Europe the cities were the centers of productivity, and the cities weren't feudal. You are right that history isn't over yet. But I'd heavily bet that the near future is capitalist. And I'd avoid betting on the far future altogether.
Economists have categorized goods for a while, and digital goods fit within these categories.
Rivalrous vs non-rivalrous. (does one person's consumption leave less for someone else. Digital goods are non-rivalrous. So are lighthouses.)
Excludable vs non-excludable. (Can the producer easily stop people from consuming the good. Example: A fireworks show in the sky isn't easily excludable.)
Rivalrous + excludable = private good (most things)
Rivalrous + non-excludable = Common good (the commons. Example: fish in the ocean)
Non-rivalrous + excludable = club good (example: a musical performance in a closed building. But also all digital goods)
Non-rivalrous + non-excludable = Public good (the justification economists give for government to exist is to provide public goods. Military defense is one of the old examples of this. My personal favorite example is asteroid defense.
Economics is an old discipline. Just because some new technology has come along, doesn't mean there isn't already a framework for thinking about it. I don't feel that digital goods are all that unique.
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