{"id":372,"date":"2011-03-05T18:47:48","date_gmt":"2011-03-06T01:47:48","guid":{"rendered":"http:\/\/charlestkerchner.com\/?p=372"},"modified":"2011-03-06T10:45:13","modified_gmt":"2011-03-06T17:45:13","slug":"understanding-the-new-network-economy","status":"publish","type":"post","link":"http:\/\/charlestkerchner.com\/?p=372","title":{"rendered":"Understanding the New Network Economy"},"content":{"rendered":"

\"\"<\/a> Yochai Benkler is the kind of polymath that eclipses ordinary academics.\u00a0 A law professor at Harvard, he also directs the Berkman Center for Internet and Society, which has as its modest mission \u201cto explore and understand cyberspace.\u201d\u00a0 In prior lives, he was the treasurer of a kibbutz in Israel, a practicing lawyer, and a clerk for U.S. Supreme Court Justice Stephen Breyer.\u00a0 But notably, he has recast economics, and he forecasts what may be the political debate of the century.<\/p>\n

As James Brink, who reviewed<\/strong><\/a> <\/strong>Benkler\u2019s book The Wealth of Networks<\/em>, wrote:<\/p>\n

The West is engaged in an escalating culture war.\u00a0 The battlegrounds are the courts, the legislatures, international bodies, local communities, and distant countries that individually may not have much power to affect the outcome through they do have a vital interest in who wins.\u00a0 The war is global\u2014and it is one that has little to do with gay marriage, abortion, terrorism, Darwinsim, or religion.\u00a0 It is in one sense, a war going on above our heads, as it is largely concerned with law and policy, and society and property.\u00a0 In another sense, it is very much a war in the trenches, as it affects our ability to choose how we will live and interact with each other as consumers, creators and citizens.<\/p><\/blockquote>\n

A Fourth Transactional Network<\/h2>\n

In the internet, social media, and information processing, Benkler sees the emergence of a fourth transactional network that parallels the price system as its non-market counterpart.\u00a0 Firms, governments, and large non-profits all exist because of the assumption that transaction costs are sufficiently high that markets can\u2019t supply what is necessary.\u00a0 Schools, for example, hire employees rather than bidding for their services on the open market each day.\u00a0 Imagine, the prospect of assembling a new teaching staff each morning as if school were a game of pickup basketball.\u00a0 As economist Ronald Coase recognized three-quarters of a century ago, private firms compete as a part the market\u2019s price system, but internally they depend on managerial fiat to direct labor and other resources because it is too expensive to use the market for these allocations.\u00a0 But Benkler argues in The Wealth of Networks <\/em>that network technology has allowed a vastly expanded, powerful system of social sharing and exchange to blossom in the non-market sector.<\/p>\n\n\n\n\n\n
<\/td>\n\n

Market<\/strong><\/p>\n<\/td>\n

\n

Non-Market<\/strong><\/p>\n<\/td>\n<\/tr>\n

Decentralized<\/strong><\/td>\nPrice system<\/td>\nSocial sharing and exchange<\/td>\n<\/tr>\n
Centralized<\/strong><\/td>\nFirms<\/td>\nGoverments<\/p>\n

Large non-profits<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Social sharing is not new.\u00a0 Forms of exchange and reciprocity have characterized societies since the beginning. \u00a0The novelty comes from the size of social sharing and the extent to which goods and services produced through \u201ccommons-based peer production\u201d are, in fact, in robust competition with those in the market sector.\u00a0 For example, Moodle, the open-source course and learning management software, competes with Blackboard and textbook vendor systems.<\/p>\n

In commons-based peer production, individual self-identification rather than management authority determines the division of labor in ventures, such as Moodle, Wikipedia, or the virtual reality system Second Life.\u00a0 As Benkler, whose engaging style has garnered him thousands of views on TED<\/a><\/strong>, explains, peer-production\u2019s voluntary, self-organizing work confounds conventional economics: \u201cIf you leave a fifty-dollar check on the table at the end of a dinner party at a friend\u2019s house, you do not increase the probability that you will be invited again. And if dinner is not intuitively obvious, think about sex.\u201d<\/p>\n

In one sense the people who toil fixing source code for Moodle or correcting an article for Wikipedia are economic chumps, giving away what others charge for.\u00a0 But Benkler argues the contrary: that the intrinsic rewards of participation and affiliation are extremely strong, and that through usage of the common product the contributors are rewarded in material ways.<\/p>\n

Even corporations, such as IBM, which have been aggressive protectors of proprietary rights, have organized themselves around cultivating the commons and is profiting from it.\u00a0 Over the years 2000-2003, IBM\u2019s revenue from services related to the open-source Linux operating system outstripped that from licenses on the firm\u2019s intellectual property.<\/p>\n

The internet is different from other technologies because it passes the power of production and the ability to collaborate in production into the hands of individuals.\u00a0 It does not mean that all the capital necessary to process, store, and communicate information is under individual control.\u00a0 That is not necessary.\u00a0 But with a very modest investment, individuals gain the ability to access information, to take from it, rework it, and submit it back to the commons. (p. 99)<\/p>\n

The Conflict Between Old and New<\/h2>\n

This new form of networked information economy contrasts and conflicts with the older industrial information economy and sets up political battles between the two.\u00a0 Although there has always been an information economy, Benkler argues that it rapidly industrialized in the 19th<\/sup> Century.\u00a0 In 1840 James Gordon Bennett founded the New York Herald <\/em>for $500, about $11,000 in today\u2019s money.\u00a0 With the advent of the mass circulation press and the capital requirement jumped to $2,500,000 current dollars in a decade, a trend of very high entry costs that characterizes the Industrial Information Economy.<\/p>\n

That older economy is being challenged by the Networked Information Economy.\u00a0 Benkler <\/em>illustrates the conflict with a story about electronic voting machines, which were seen as the answer to the \u201changing chads\u201d problem with punch-card ballots.\u00a0 In 2002, Diebold, the leading supplier of electronic voting machines, provided assurance that its new machines were accurate and secure, and these assurances were taken at face value by the mainstream media.\u00a0 But as Benkler notes, less trusting internet activists decided to test the company\u2019s claims.\u00a0 They obtained and published the machine\u2019s specifications and code, and a whistleblower inside the company gave them emails that showed the operating codes for some of the machines had somehow been tampered with after <\/em>they had been certified for use.\u00a0 Diebold attempted to suppress these findings, claiming the code and emails were protected by the Digital Millennium Copyright Act, but the volunteers\u2014mostly university students\u2014had made and distributed 50 copies, creating a network of information that was nearly impossible to suppress.\u00a0 The online discussion triggered an investigation by California\u2019s secretary of state, who set up an independent investigation, and within a few months many of California\u2019s voting machines were decertified.<\/p>\n

Implications for Public Education<\/h2>\n

The elements of this story have clear implications for public education.<\/p>\n

First, there are profound effects on how democracy, public discourse, and watchdog journalism are practiced, and thus how schools can and should teach about it.\u00a0 As Benkler writes, \u201cthe ubiquity of storage and communications capacity means that public discourse can rely on \u2018see for yourself\u2019 rather than \u2018trust me.\u2019\u201d\u00a0 This is a very different history and civics lesson than the one we now teach.\u00a0 It invites the kind of insight that Deborah Meier taught students at the legendary Central Park East academy in New York: Ask about evidence; who is speaking and what\u2019s their point of view; what causes what?<\/p>\n

Second, a powerful production system is at work.\u00a0 Students and other volunteers were able to uncover flaws in the Diebold system that professional journalists failed to see, in part because they were too trusting of corporate assurances, and in part because they had neither the knowledge or manpower to delve deeply into the matter.\u00a0 The volunteers had all the necessary tools in their hands.\u00a0 They did not need huge capital investments; all they needed was the ability to share their expertise and tools, which in this case included the sharing the software to unlock Diebold\u2019s encrypted files.<\/p>\n

Third, the old economy will use the force of law to strike back.\u00a0 Diebold used the vastly expanded entitlements of the Digital Millennium Copyright Act to threaten the universities the students attended, but in the end the corporation was outmaneuvered by the students, who made so many copies of their files that they could not all be found.\u00a0 Public schools are particularly sensitive to the problems of copyright, and corporations such as Disney have been particularly aggressive at pressing their protections, for example when a teacher shows a cartoon in class.\u00a0 (Which is probably not very good use of class time in the first place, but that\u2019s beside the point.)<\/p>\n

The web aphorism, \u201cinformation wants to be free,\u201d is clashing with what Benkler calls \u201ca second enclosure movement\u201d: a concerted effort to shape the institutional ecology in order to help proprietary models of information production at the expense of burdening nonmarket, nonproprietary production.\u201d (p. 381).\u00a0 The problem is not solely with profit seeking, although there is plenty of that.\u00a0 There is a great deal of legal tradition that favors the assignment of property rights to individuals, regardless of how hard they are to sort out, and hostile to the notion of common production.<\/p>\n

This suggests that school districts along with colleges and universities have a very strong interest in creating a workable common space.\u00a0 Universities, more than school districts, have a history of cooperative enterprise, the free sharing of ideas and content among scholars.\u00a0 But they also have a history of claiming rights.\u00a0 Patent and license income is important to many leading research universities, just as it used to be to leading school districts, which in the somewhat distant past developed and sold curriculum to other schools.\u00a0 (Ironically, the current leading provider is the Singapore Ministry of Education, which trades on the high test scores of its students to sell its math curriculum worldwide.)<\/p>\n

The nature of this fight involves several different layers of government and technology, and it suggests that both states and the federal department of education have a very large interest in the second enclosure movement fight, largely on the side of openness.<\/p>\n","protected":false},"excerpt":{"rendered":"

Yochai Benkler is the kind of polymath that eclipses ordinary academics.\u00a0 A law professor at Harvard, he also directs the Berkman Center for Internet and Society, which has as its modest mission \u201cto explore and understand cyberspace.\u201d\u00a0 In prior lives, he was the treasurer of a kibbutz in Israel, a practicing lawyer, and a clerk […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=\/wp\/v2\/posts\/372"}],"collection":[{"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=372"}],"version-history":[{"count":8,"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=\/wp\/v2\/posts\/372\/revisions"}],"predecessor-version":[{"id":378,"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=\/wp\/v2\/posts\/372\/revisions\/378"}],"wp:attachment":[{"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=372"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=372"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/charlestkerchner.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=372"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}