View source for On the Economic Impact and Needs of the Wealth of Networks


From: PHILIPPE AIGRAIN. On the Economic Impact and Needs of the Wealth of Networks

Excerpted from Symposium on the Wealth of Networks. Policy Futures in Education Volume 6 Number 2 2008

URL = http://dx.doi.org/10.2304/pfie.2008.6.2.152


"When I drafted Cause commune [1] in 2003-04, my main motivation was to provide a comprehensive
theoretical foundation for the growing information commons [2] movement in Europe. In the
background was another motivation: helping continental European readers to better relate with
American commons thinking. Several factors were limiting the ability of European readers to draw
inspiration from or to build critical conversations with the generation of thinkers who have put
information commons on the agenda in the USA. The absence in continental Europe of an
equivalent to First Amendment thinking (despite commitments to freedom of expression); a
stronger focus in Europe on the opposition between markets and State, with less consideration for
the importance of societal action; the difficulty to translate terms such as commons in a modern
sense, even though they are of Latin origin: all this contributed to possible misunderstandings.
Today, commons thinking has become global in scope, and develops in original forms in non-
English speaking areas. Translations of ‘commons’ slowly percolate in various languages. In
France, Members of Parliament speak about libre software in their debates and lawyers in university
and official circles organize workshops on creative commons approaches. Brazil is at the forefront
of commons-based creation, and despite some opposite trends, India hosts new approaches to
commons-based innovation and some original commentators (sarai.net, Suman Sahai or Vandana
Shiva). In North America, thinkers such as James Boyle, Lawrence Lessig or Eben Moglen have
gone to great efforts to create narratives with a more universal perspective. James Love and
Knowledge Ecology International [3] bootstrapped worldwide non-governmental organization
(NGO) and government coalitions that push a knowledge commons agenda forward in
international organizations. The revision of the GNU GPL (General Public Licence) free software
license has explicitly aimed at a more universal language and validity.

Yochai Benkler’s Wealth of Networks takes a new step in this direction. Benkler’s work is deeply
rooted in American liberal philosophy. However, his interest in political philosophy globally has led
him to express his views in a language that can be read from a European or global perspective.

Central to this possibility is the bridge provided by Amartya Sen’s theory of capabilities. Amartya
Sen has emphasized [4] how freedom is necessary to development but also how health, education,
or preventing excessive inequalities are necessary for the build-up of capabilities, without which
freedom remains just an idea. By linking in an inseparable manner freedom, concrete capabilities of
action, human development, and social justice, Amartya Sen has provided a theory of justice that
can be heard across the Atlantic and elsewhere, in particular, of course, in India, his mother
country. Recognizing it calls for radical reform to our ways of thinking, for instance, about
education, culture, or public health. Seeing education mostly as a transfer of existing knowledge
(which is still a predominant view in many quarters of Europe) is clearly challenged by the
evidence that the construction of critical individuals able to take initiatives in the world deserves
more emphasis in our information era. The traditional European view of culture as the recognition
of a distinguished elite by connoisseurs (also adopted in some circles in the USA) is challenged by
the alternative model of a continuum of practice ranging from reception to professional creation of
the highest quality. Meanwhile, approaches to health based on targeted technological medical acts
and drugs and the associated economic and patent models exhibit poor performance in comparison
to systems that put more emphasis on education, universal access to medical services and drugs
and the non-medical conditions of public health.

It is in the field of information and its technology that capability theory is most relevant.[5]
When information and tools are available as commons for all, an unprecedented ability to express
oneself, reach for others, criticize or praise, cooperate on all forms of achievements develops in
individuals and groups that they form. The Wealth of Networks is an enlightening tribute to this
power. However, this recognition, and the ability of European and American analysts to share this
common umbrella is only the start of a new conversation. This conversation is likely to have many
threads, but I will just initiate one, by asking: How does the growth of information commons and
related non-market activities interact with the monetary economy?



'''From Parallelism to Collision'''

Yochai Benkler, just like Lawrence Lessig [6], proposes an optimistic view of the impact of
commons-based societal production of information on the economy overall. There are strong
arguments in favour of such an optimistic view as a long-term perspective. If a huge sphere of nonmarket
activities develops, the provision of infrastructure and support services to these activities is
itself a huge domain. In addition, more demanding consumers and more knowledge and
innovation (for instance, on environmental issues) open new prospects for development in the
material economy. However, what about the transition from our existing economy to this longterm
perspective? Here is a small narrative to illustrate why this transition risks being a difficult and
chaotic one, well beyond the choices whose need Yochai Benkler rightly stresses regarding our
regulatory ecology.

Once upon a time, there came the information revolution. First, from 1945 to 1975, non-market
societal production of freely exchangeable and usable information developed silently. It happened
as a natural way of using information technology and information-based science, in specialized
circles (scientists, programmers), often without naming explicitly what was done. In this period
scientists and engineers created the best part of software techniques and algorithmics, of network
protocols, user interfaces and digital media concepts, of information science and how it can be
applied in biology. This infrastructure set the basis for the next 30 years of human development,
new markets and growth. However, very different ways of using information technology also
matured during the early information age. Large organizations (both companies and public
organizations) which were at the time the principal users of computers focused on process, profit
and cost optimizing, with contrasted results on the latter. These early trends are now visible at full
range, with the domination of finance on industry agendas and with a form of globalization where
mechanisms [7] delay its positive effects on development. More recently, it was imitated by some
emerging countries (mostly China) in which the lack of democracy makes it possible to exert
lasting pressure against the build-up of local initiatives that serve human development. The control
and surveillance aspects of information and communications technology (ICT) [8] have become
more prominent: security and short-term profit optimizing have developed new synergies.

In a second phase, the two trends that earlier developed in parallel have started colliding. As first
this collision was noticed only in specialized circles. Though the process preparing TRIPS
(Agreement on Trade-related Aspects of Intellectual Property Rights administered by the World
Trade Organization) can be traced back to the mid-1960s, who understood what was going on
before its signature in 1994? Similarly, the expansion of information commons and societal
production was visible only for its initiators until the mid-1990s. Today, it has become evident that
there is a big battle to set the regulatory environment in favour of one or the other trend.
However, this regulatory battle is only the perceptible part of deeper economic tensions. The two
models are also fighting for money and for time. I mean capital and human time.



'''Capital and Profits'''


Let’s start with capital. When one compares the ratio of stock capitalization to turnover, added
value or profit [9] for major world companies in many sectors, one finds huge discrepancies. The
ratio of capitalization to turnover varies from 0.11 (General Motors or Ford Motor) to 17 (Google)
across companies, from 0.35 (automotive) to 3.55 (pharmaceuticals) across sectors. It ranges from
0.45 to 17 across the software sector where software service companies, proprietary software semimonopolies
and companies based on large network effects such as Google cohabit. Most
companies that have high ratios are patent (mostly in pharmaceuticals and agro-food genetically
modified organisms), copyright (in software and media) or trademarks (in food and luxury
consumer goods) businesses.[10] These information capitalists [11] set the standards of desired
return on capital. The effects of these standards are felt well beyond quoted (public) companies:
research and development (R&D) funding or venture capital force many innovators to pose as
future information capitalists rather than simply develop a sustainable and reasonably profitable
activity that serves the information commons and non-market activities. In the present state of
market organizations, the prospects of ROI (return on investment) for added-value intermediators
in the non-market sphere are a huge question mark. In a given domain, one dominant collaborative
medium can rest on advertising but serious economic works [12] have demonstrated that this
model cannot scale up. Can the indirect funding by those who benefit from the non-market sphere
(for instance, hardware manufacturers and telecommunications companies) and the recycling by
some public interest-minded winners of financial games suffice to fuel the future wealth of
networks? Can mutualizing between individuals provide enough of a complement? Is some form of
government organization of mutual funds needed? All these questions deserve policy’s and
society’s interest.



'''Human Time'''


The fight for access to capital is only a skirmish compared to the war that rages for human time. In
a few decades, television has captured half of human free time in the developed world (3½ hours
per day in most countries). Time recently liberated from television in favor of ICT-mediated
activities has unfortunately gone for a significant part to immersive activities, such as games and
advertising-dominated digital media. What is less known is the degree to which the present
economy has come to depend upon the capture of human attention. We are not speaking here of
media alone. The demand for many consumer goods is sustained only through what one of the
French television chief executive officers described as ‘available brain time’ being provided by
media to the providers of these goods. As brain time becomes less available, as more valuable
endeavours compete for it, our present economy will go into a crisis. This crisis is also an
opportunity, just as the environment and climate change challenges are an opportunity.
People becoming more independent, more critical, more able to choose how they use their
time, becoming producers as well as consumers, members of the public in John Dewey’s sense [13],
is an exciting perspective. It is infinitely valuable, whether or not it is good for the economy, but
there is all reason to believe that it will lead to new forms of economic growth. However, we will
go through chaotic paths before we are there. What will be apparently taken away from today’s
economy is actually fake; it is monetary face value that stands only on arbitrary monopolies,
conventional beliefs or what will look retrospectively to be a strange consent to hypnotic
consumption. We had better get our measures right as soon as possible, so they start showing what
is being built during this process, with indicators that capture the many facets of the wealth of
networks."
(http://dx.doi.org/10.2304/pfie.2008.6.2.152)



'''Notes'''


[1] Cause commune: l’information entre bien commun et propriété [Common cause: information between
commons and property]. Paris: Fayard, 2005.

[2] In this article, information commons refers to productions that can be represented as information
(creative works in all media, software, biological or other scientific information, information
processing tools such as software, etc.) when they are given a commons status (are freely usable to
relevant degrees). By extension, it also covers the collaborative activities that produce and value
these productions.

[3] Formerly the Consumer Project on Technology.

[4] In particular in Development as Freedom. New York: Anchor, 2000.

[5] See The Wealth of Networks, pp. 308-311, or my paper, ‘Capabilities in the Information Era’,
TransAtlantic Consumer Dialogue (TACD) Workshop on the Politics and Rhetorics of Intellectual
Property, Brussels, March 2006. http://paigrain.debatpublic.net/docs/TACD-200306.pdf

[6] This section is the product of a conversation with Lawrence Lessig initiated in Berlin after his
Read/Write Society talk during the Wizard of OS 4 Conference and pursued through later exchanges
by email.

[7] Globalization of uniform patent and copyright rules, division of production in small modules with no
visibility of local workers – including technicians and engineers – on the overall strategies.

[8] The aspects were always present, from World War II to the Cold War. The difference is the degree of
confusion between domains: non-commercial exchange of information covered by copyright can be
depicted as a form of terrorist cybercrime by copyright stock holders who successfully lobby for
making it the object of criminal sanctions, while the creation of data retention for security purposes
can be included in a European directive on privacy.

[9] Cf. Economic Impact of Open Source Software on Innovation and the Competitiveness of the ICT Sector in the
EU, study conducted by a consortium led by MERIT for the European Commission Enterprise and
Industry General Directorate, pp. 118-121.
http://ec.europa.eu/enterprise/ict/policy/doc/2006-11-20-flossimpact.pdf (2004-05 data).

[10] A small number are network effects companies, Google being the prototype of this category. They
would deserve a specific treatment, as their activity is much more compatible with the development
of commons-based non-market activities, though in a limited (in number of possible winners) and
very unstable manner.

[11] I use the word for all companies whose added value lies predominantly in the costless reproduction of
an intangible entity, that can be information per se or some informational entity included or attached
to their products.

[12] See, for instance, Douglas A. Galbi, Some Economics of Personal Activity and Implications for the
Digital Economy, First Monday, 6(7).
http://www.firstmonday.org/issues/issue6_7/galbi/index.html

[13] Informed by their awareness of the interest of a greater community


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