[p2p-research] Artificial Scarcity Is Subject To Massive Deflation | Techdirt
free.market.anticapitalist at gmail.com
Thu Nov 5 19:59:40 CET 2009
On 11/5/09, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> I actually thought this comment by Reasons...clearly a smart guy...was even more interesting...
> The glass is twice the size it needs to be...
> by Eric Reasons (profile)
> Thanks for the link and the kind words. You're absolutely right that I didn't focus on the *opportunity* side in that post, but I definitely see it as being there. "Deflation" is a value-neutral concept, and it has it's advantages, particularly in this economy.
> Let me clarify a bit. I believe that this efficiency will make the economic markets they affect "shrink" in terms of economy and capital. It doesn't mean that the number of variation of the products available will shrink, just the capital involved.
> Hours will be cut. Wages will fall. So too will the cost of living fall as these efficiencies are passed on the consumer. The balance between these two forces will be the key to determining how painful the transition is.
I agree with Reasons' response. Here's what I wrote in the comments:
I think the quibble over whether abundance will shrink markets
involves a confusion of exchange value with utility.
Current metrics of economic output and market size are based on the
value of inputs consumed. Anything that increases the total value of
inputs consumed increases the size of GDP. On the other hand,
increased efficiency destroys value.
Theories to the contrary, like Romer's New Growth Theory, assume that
productivity increases can be capitalized as a source of rents, rather
than being passed on to the consumer through reduced price.
To assume that reduced cost from imploding IP rents will be offset on
a one-to-one basis for increased monetizable demand elsewhere,
requires the assumption that demand is infinitely elastic. I think
it's more likely that, when it takes fewer hours of labor to earn the
money to purchase present consumption goods, part of the present sum
total of monetized value and wage labor will simply vanish. As people
are able to meet present needs outside the cash nexus, with less
labor, they won't discover enough new needs to keep working the same
number of hours to buy additional kinds of stuff; they'll just work
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