[p2p-research] big does not necessarily innovate: the current VC model is broken

Paul D. Fernhout pdfernhout at kurtz-fernhout.com
Mon Nov 9 07:22:41 CET 2009

Kevin Carson wrote:
> On 11/6/09, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> On the
>> other hand, productivity is rapidly increasing because basic systems (e.g.
>> cell phones in Africa) are applied at whole new scales.  It isn't
>> "innovation" in the sense of a new idea, it is the simple application of
>> capital.  Soon that will run its course as it has in the developed world.
> And in any case, if such productivity means a reduction in material
> inputs per unit of output, that should mean (ceteris paribus) a
> reduction in nominal GDP and the opposite of economic "growth,"
> because exchange-value (which results in the long run from the cost of
> production) will implode.  The only way out of this is if the
> increased productivity frees up demand for some other industry.  But
> in general, I think the amount of new demand will always be less than
> the freed up resources, because (as discussed in another thread)
> demand is not infinitely elastic.

In the long term, I agree (though I'd quibble with "always"). Or at least, I 
think we are entering a phase where demand will grow more slowly than 
productive capacity, which has the same effect.

People were probably just as happy as not before agriculture; maybe happier 
(because lots of hunter/gatherer time was self-directed). They might not 
have lived as long (though even that is questionable). How happy someone can 
be is set more by social aspects and neurological limits than most anything 
else (like a house full of stuff). So, that idea suggests more stuff is 
going to have diminishing returns. Community seems like a better investment, 
and community is not necessarily that expensive compared to individual 
material needs, even when you build big gathering halls or a globe spanning 

--Paul Fernhout

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