At 7:26 PM -0400 4/15/01, Declan McCullagh wrote:
On Sun, Apr 15, 2001 at 07:26:24PM -0700, Tim May wrote:
And my point is a very serious one: saying that "anarchy" cannot work in markets is not much different from saying anarchy (uncoerced transactions) cannot work in areas where in fact uncoerced transactions are the _norm_.
Right. It's like telling a statist that certain government programs and regulatory systems aren't absolutely necessary. Their initial reaction is to disbelieve this notion: "But how would it work?"
To phrase Tim's point another way, taking some liberties: If there is sufficient market demand for a product or service, it will become available, whether or not the government regulates it, encourages it, or prohibits it. If we knew tomorrow that copyright law would disappear in 10 years, the market would move to continue a system where new content would be available -- the incentives are too strong to ignore.
Obviously ease of avoiding regulation and technological advances aiding reputational systems are big variables too.
Like I've said recently (and years ago, too), the "economics of black markets" is an interesting topic. One could even take out the "black" loaded term and just refer to economics of markets, except that then sounds like ordinary Econ 101. An agent typically undertakes/completes a transaction when: Benefits > Costs or, elaborating, when: [Perceived benefits] > [Perceived costs] plus some epsilon for hassle/effort (This can be puffed out, or term re-written, with various subterms reflecting actual prices, risks, costs of money, criminal penalties, chance of detection, etc. I did this some years back, but don't have the time right now to track down my article or to rewrite it. I hope most readers get the picture and can fill in the blanks themselves. Probably more useful to do that.) "Perceived benefits" has the usual meaning. The agent may be wrong in his calculation or estimate, but it is for him to make the best overall estimate of what he can get out of the transaction. Perhaps by using the thing he buys, perhaps by selling it to another, whatever. "Perceived costs" are likewise his estimates of actual monetary cost, risks to him (imprisonment, defection, bad deals) in the transaction, etc. Into this side of the equation will go the possible law enforcement issues. And maybe even "psychic costs" for buying something illegal or unethical. This is the sense in which black markets are simply markets. The "costs" of being in the black market are simply more terms on the cost side. Nothing new here, as black markets have been the norm in most societies at most times, with the local thugs collecting some percentage, etc. For example, in the Napster case the actual monetary costs of downloaded songs were zero (lacking MojoNation kinds of mechanisms). The cost was partly bandwidth and sitting around waiting for Metallica songs to download. There was also some slight cost to some students at universities who were sanctioned for their Napster habits. There was no "criminal cost," at least for the downloaders. As another example, illegal drug users may put much heavier emphasis on the criminal costs, i.e., the risk that they will be caught and prosecuted, blah blah. There are also the reputational issues such as we've been discussing. These show up in the cost side as risks, actual costs to check credit ratings, etc. But still the Basic Equation stands: Benefits > Costs What Napster did was to alter several terms in the equation. What cypherspace offers for, say, porn trading rings is the same thing. Claims that transactions will simply "not happen" if some parts of the equation get murkier than they might otherwise be are not convincing. Markets clear, and cypherspace will change the terms in the equation but not the equation itself. --Tim May -- Timothy C. May tcmay@got.net Corralitos, California Political: Co-founder Cypherpunks/crypto anarchy/Cyphernomicon Technical: physics/soft errors/Smalltalk/Squeak/agents/games/Go Personal: b.1951/UCSB/Intel '74-'86/retired/investor/motorcycles/guns