Markets (was Re: Hayek was right. Twice.)

[Sampo Syreeni]

On Wed, 3 Jul 2002, Gabriel Rocha wrote:

>Property does not always consist of physical goods.

Of course not. Am I not making this precise point?

>To use some of your examples, the polical process involves votes, which
>are the property of the person casting the ballots, likewise, at least
>in this country, ballots are cast voluntarily.

However, that sort of property isn't anywhere near the kind one would
expect of a free market commodity -- it isn't severable. You can't legally
sell or buy votes.

>Time and effort are both considered "property" to be used as deemed fit
>by the person possessing, in this case, the skills to use them on an
>Open Source

What can I say, barter in time and effort is probably the best sign of a
gift economy in action.

>I can't think many things more modular than movies, except perhaps
>theatre, but movies have even more latitude. Actors can't be switched?
>Sets can't be constructed out of "nothing" on a computer screen?

Of course they can. However, not one of those parts is useful in itself.
You don't sell a set without the actors, or vice versa. That's the
problem. With Linux, each individual utility is useful in itself. If
someone needs the functionality, one just codes it and releases. In many
cases that's a few days work, and a good part of the benefit goes to the
coder himself. Consider then something like a novel. It's not very useful
if you tear out the last 50 or so pages, is it? Whoever is making and
paying for the effort (perhaps with his time, as is the case with
volunteer projects) has to be willing to invest enough to finish the work
before it acquires real value. That value is then thinly spread over a
considerable number of readers many of whom have to be willing to pay for
the effort if the novel is to come to being in the first place. When I
talk about modularity, I talk about it in the economic sense of
divisibility, not the technical one of being able to create a single act
of a play, a movie set, a Java class or an actor's performance in
isolation. The trouble with public goods comes around when no single
person is willing to pay for the whole project, but a million or so in
toto would be, barring transaction costs from things like freeriding. If
you grok it, I can't help you.

>Movies can't be made with virtually no budget?

Hollywood blockbusters? Hardly. That was what I was talking about from the
start. Besides, I do know a couple of Finnish low budget directors. Only
rarely do I find the tenacity to actually delve into their work. Money
isn't everything in movies, either, but it's still a lot.

>As someone who actually helps people with unix problems and who is a
>unix user, I want to let you know that you fall into the "stupid user"
>category if you can't get a linux distro to install on your computer.

First, there is nothing wrong with being a "stupid user". Stupid users are
who software is mostly for, aren't they. Second, it's not the whole
install, it's details like getting X to work with a nonstandard display
memory config. I'm not exactly unknowledgeable about software, but I'm no
kernel hacker either. Do you think most people should be?

>Throw in the fact that "usefulness" is an entirely relative term, and
>you have a really poor argument.

Throw in the fact that this precise relativity is what the whole of
economics revolves around, and the table turns quite nicely.

>Often the economic argument made is that people do what is in their best
>interest. The problem that arises is when people who aren't very bright
>(hint, hint) assume that that means financial reward of some kind.

Did I somehow limit the question to money? If so, that's certainly not all
that I meant. The economics of public goods apply perfectly well to
nonfinancial compensation.

In fact, copyrights do not have anything to do with money, per se, only
with the establishment of a property right in abstract things. If people
behave the way you seem to think they do, we will slide into a
nonfinancial information economy even in the presence of copyright; Coase
was brought into this, and it's still relevant. If you start from the
normal assumptions relating to laissez-faire economics, you'll also assume
transaction costs to be negligible and a stable, unique equilibrium to
exist, in which case any initial allocation of property rights will lead
to the precise same outcome.

>Well, libertarians usually, though not always, go along with free
>markets, which is not what you're advocating.

Actually I'm not advocating a whole lot, here. Right now I'm mostly making
a point about public goods and Coase's theorem, and their connection to
the institution of intellectual property rights. As I said, I'm an IP
abolitionist and free-marketeer myself.

>Usually, any economic theory that assumes that anything could have no
>value to anyone is wrong.

But if you read what I've posted so far a bit more carefully, you'll see
that that is not at all what I've assumed.

>Bilateral trade is the only kind of exchange in a free market
>enviroment. As long as the exchange is made freely and willingly [...]
>it is always bilateral.

Not true. A simple example would be people shunning someone in opposition
of their (mostly) shared moral code. This is a typical example of
publicness (everyone has to gain by still interacting with the shunned
individual) and some of its civil counter-forces (morality) in action.
Examples of trade which are necessarily multilateral are everywhere if
you're just willing to look. The interesting part is how to cheaply get
around the extra costs incurred by the setting. You're not helping a whole
lot in that department.

>[...] (government regulation produces a bias, always.) [...]

True. But the issue only gets interesting when you can explain why, and
also why the market does (or doesn't do) better.

(I'm also thinking it's high time for me to shut up.)

Sampo Syreeni, aka decoy - mailto:decoy at iki.fi, tel:+358-50-5756111
student/math+cs/helsinki university, http://www.iki.fi/~decoy/front
openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2