Markets and Post-Scarcity

[Traitorfish]

A deceptively straightforward question for you: are market economies compatible with a post-scarcity society?

What makes me ask this is all the full you see about intellectual property law and digital distribution, because that's a situation in which we're presented with the potential of digital abundance, but the market does not seem to have developed any way of addressing this. The entertainment market was constructed on a basis of scarcity, though the technical limits of distribution, but now producers have to resort to artificial scarcity, i.e. the use of intellectual property laws to restrict free distribution, to continue to profit. Part of this is down to business models, certainly, and it may be that workarounds are developed by which digital information is distributed virtually freely and funded by indirect means, but the very fact that this is a workaround, that payment must be deferred by artificial means, suggests that markets do not contain the potential for a true resolution of this problem, and as such that they may eventually constitute an impediment to technological advancement- if they have not already done so. In the case of digital distribution, the barrier between scarcity and post-scarcity is to all intents and purposes social, not technical or physical; does that reflect limitation to the underlying structure of the market, or is this a problem specific to this area?

But, this is obviously a contentious suggestion, and not one that I would expect anyone to simply agree with. So any thoughts on the topic, or criticisms of mine?

 

[Patroklos]

I think you are missing the fact that that imposed (not artificial) scarcity is what makes continued investment in those things worthwhile.

Rather than hindering technological and social progress, those markets are driving that progress where otherwise there would be little benefit in participating.

 

[squadbroken]

Short answer: no

Long answer: no, because scarcity is the core of economics and removing it from the equation would alter human society so radically that no system to date (and possibly no system even imaginable to someone living in scarcity-based society) would be truly compatible.

I do not think intellectual property/digital goods in modern society can be thought of in post-scarcity terms, even if it is technically unlimited in abundance, because it is still produced in a scarcity-based society, by people who have need of scarce resources.

 

[Winner]

A deceptively straightforward question for you: are market economies compatible with a post-scarcity society?

Frankly, no. I read an interesting essay once in which the author predicted that eventually nanotechnology will advance to such state that it will be possible for most basic products to be manufactured at home. Hence consumer economy as we know it will practically cease to exist. He believed that eventually what we buy will be mostly software - blueprints/instructions for the nanobots in home minifactories.

But then, if software piracy is already such a huge problem, imagine what will happen then. Especially if immersive virtual-reality networks will make other forms of entertainment largely obsolete. Why should I pay so much to fly to Maldives, when I can go there in virtual reality for a fraction of the price?

On the other hand, there are essentials that are irreplaceable - energy, water, air, food, materials for the nanobots, stuff like that. You'll still have to buy that.

 

[Ayn Rand]

If something is genuinely non-scarce, then I don't see why a market would even form around it. Take something like the air we breathe - there is no market for that [although even that is complex now, as pollution regulations create an indirect kind of defensive market in some way].

Traitorfish, I think you may have selected a sub-optimal example because "information" is in fact an extremely complex phenomena, particularly when dealing with intellectual property concepts and laws, which are brutally complex.

However, the motive to create intellectual property [such as art, music etc] still requires an incentive, and also requires investment, risk and so on. There are costs other than the cost of digital reproduction, as well as the ethical right of the author to make a profit from value-creating products.


As for your more serious allegation - that markets will impose an artificial economic scarcity in order to make unjustified profits - then this is tied to something known as rent-seeking, which is a common form of market behaviour that will almost certainly occur in some way in a "post-scarcity" World as we already see it happening today in many markets.

http://en.wikipedia.org/wiki/Rent-seeking

 

[Traitorfish]

I think you are missing the fact that that imposed (not artificial) scarcity is what makes continued investment in those things worthwhile.

Rather than hindering technological and social progress, those markets are driving that progress where otherwise there would be little benefit in participating.

How so? Merely observing that scarcity has previously spurred technological development doesn't in itself suggest that it will do so indefinitely, and so doesn't really address the question.

Traitorfish, I think you may have selected a sub-optimal example because "information" is in fact an extremely complex phenomena, particularly when dealing with intellectual property concepts and laws, which are brutally complex.

However, the motive to create intellectual property [such as art, music etc] still requires an incentive, and also requires investment, risk and so on. There are costs other than the cost of digital reproduction, as well as the ethical right of the author to make a profit from value-creating products.

Well, that's partly why I think the example is relevant: because it suggests that the combinations of markets and post-scarcity can be dysfunctional, rather than the former simply fading away in front of the latter. Unless a post-scarcity situations is universalised, which is to say that those creating infinitely replicable products (music, mechanical designs, whatever) are able to access their own needs in a similar fashion, then it will necessarily become socially disruptive.

As for your more serious allegation - that markets will impose an artificial economic scarcity in order to make unjustified profits - then this is tied to something known as rent-seeking, which is a common form of market behaviour that will almost certainly occur in some way in a "post-scarcity" World as we already see it happening today in many markets.

http://en.wikipedia.org/wiki/Rent-seeking

That's a good point.

 

[warpus]

If something is genuinely non-scarce, then I don't see why a market would even form around it.

Video games are a huge market. Not sure if that's technically non-scarce, but you can sit there and churn out an infinite supply of Fifa 11, if you wanted to.

 

[Ayn Rand]

Well, that's partly why I think the example is relevant: because it suggests that the combinations of markets and post-scarcity can be dysfunctional, rather than the former simply fading away in front of the latter. Unless a post-scarcity situations is universalised, which is to say that those creating infinitely replicable products (music, mechanical designs, whatever) are able to access their own needs in a similar fashion, then it will necessarily become socially disruptive.

Dysfunctionality is a possible outcome - markets might not simply "fade away" But this is quite an economically sophisticated area - the market system is almost infinitely complex, and how that enormous mass of values and information will transition into a new form is almost anybody's guess.

On the one hand, people are not forced to hand over money in exchange for intellectual property, then they are free to choose an alternative provider or competitor who follows a different model [assuming that it is a free market]. So from a competition perspective, there has yet to emerge a serious competitor who both create and distribute intellectual content. There are organisations like 'Pirate Bay' who distribute other people's content, but they don't create any valuable material.

On the other hand, if costs of distribution fall to a theoretical zero, then prices should in principle fall downwards to the next "cost-plus" base line [so costs such as insurance, personnel, advertising, plus some profit]. However that is not a guarantee that costs will actually get lower - if the new digital environment requires computer programmers, more advertising, increased competition from new vendors and so on, then non-distribution costs may actually go up.

So it's possible that the elimination of traditional distribution costs may simply be cancelled out by the development of new and unexpected costs which were not predicted but arise anyway. I find it highly unlikely that an authentic "zero-cost" product could arise, as consumers naturally seek well-made, well-designed intellectual property that is high in time and technology content and which has high set-up and development costs that are not related to distribution.

 

[Leoreth]

I think they are compatible with each other. But as we see in your example, markets are neither necessary nor beneficial in this situation, and can even be obstructive.

Anyway, I think to correctly assess your example, we have to differentiate between abundance of our means of distribution and the abundance of content. I think we have reached near-post-scarcity for the former (at least in the developed world).

But the latter is one of the things that would always be considered scarce. If an artist wouldn't paint a painting, compose a song or write a book, we wouldn't have it. With the rest of our lives still governed by a scarcity market economy, there still need to be incentives to make it worthwhile or at least sustainable for that person to do so. So we need a market mechanism at least in some way to make sure that still happens.

However, I'm fairly sure the current system there is broken and favours the distributors of art much more than it does the creators.

 

[Monsterzuma]

Link to video.

 

[innonimatu]

But the latter is one of the things that would always be considered scarce. If an artist wouldn't paint a painting, compose a song or write a book, we wouldn't have it. With the rest of our lives still governed by a scarcity market economy, there still need to be incentives to make it worthwhile or at least sustainable for that person to do so. So we need a market mechanism at least in some way to make sure that still happens.

We do? Art started only in the late 19th century? That's news to me!

 

[Leoreth]

Huh? Markets were invented in the 19th century? Maybe you're confusing things with capitalism? Or are you referring to patronage based art?

 

[uppi]

I believe markets can work even for non-scarce goods. But to do that, they have to be generalized: It is not the product itself that is scarce, but the effect of the product.

For example the time people spend playing video games is limited. So even if all games were freely available, the time spent on one video game would be determined by the competitiveness of the games against all other games. So if there would be a system that rewarded developers for the time people spend with their games, you would have a market without the product itself being scarce.

 

[Ergo Sum]

I think the conventional response from Patroklos et al. in this thread expresses a common way of thinking: intellectual property allows progress by promoting technical and social advancement. This could be true today, but I think traitorfish is absolutely correct. Take the music industry: imposed scarcity supposedly allows artists who produce music that a lot of people enjoy to profit and survive off of their music. Intellectual property rights let them pocket money off of that, but it also means that a huge industry has grown up around mass producing and distributing music, which besides producing overhead costs on the music you buy, conflates the profit motive with musical expression. As many people express, the music that gets created by the big labels is often worse than those who never expect profit in the first place... Like Leoreth pointed out, art is not a fundamentally capitalistic activity, I would suggest it's antithetical to capitalism in many respects. But now we have a situation where the primary form of artistic expression is based on a profit motive instead of artistic expression (a la Marxist 'species-being').

On a grand scale, I don't think it's out of the realm of possibility that big industries will whine and cry and sue people as much as they can to restrict the proliferation of post-scarcity products, even when they have less and less justification. Cracked.com has a humorous (depressing) article about just this subject that's worth a read. The jist is that even when we run out of a reason to buy products (say, everyone has magic nanobots that create everything), the corporations will still be there, doing their best to continue selling us things, because they're based on the profit motive and they will do their damndest to maintain their cushy status. Once capitalism is around, it will fight tooth and nail to continue. Cue Weber's "iron cage" metaphor.

 

[innonimatu]

Huh? Markets were invented in the 19th century? Maybe you're confusing things with capitalism? Or are you referring to patronage based art?

Markets based on legal privileges such as copyright and patents? They certainly were! And in some places and with some kinds of "intellectual property, late in the 20th.

And yet, somehow, men and women managed to create during all their previous history... and no, I'm not referring to "patronage-based art", the terms under which art was produced were little different (especially by the 19th century) from what they are today, minus the legal privileges to continue to charge income on it, which usually does not belong to the actual artists now anyway. And the same applies for industry, regarding patents. Your own country did without those until 1877, and again proved that it was possible to do without it when, twice in 30 years, it had its companies later stripped from their patents by other countries.

@Ergo Sum: interesting piece, in that at least some popular sites are running stories about these modern contradictions between abundance and scarcity. The hierarchy of needs thing also occurred to me recently. And I think that you are too pessimistic: corporations will fight tooth and nail, but demand for their products simply cannot increase. Because of one very simple thing: when what is sold is optional, entertainment, the absolute limit to sales is set by the time prospective buyers have to enjoy it. Either people will work less, have more income and more leisure, or they will consume less for lack of time or lack of income. Either way, the capitalist way of expanded economic growth, necessary for expanded profits, meets a wall.

 

[Ayn Rand]

Markets based on legal privileges such as copyright and patents? They certainly were! And in some places and with some kinds of "intellectual property, late in the 20th.

And yet, somehow, men and women managed to create during all their previous history... and no, I'm not referring to "patronage-based art", the terms under which art was produced were little different (especially by the 19th century) from what they are today, minus the legal privileges to continue to charge income on it, which usually does not belong to the actual artists now anyway. And the same applies for industry, regarding patents. Your own country did without those until 1877, and again proved that it was possible to do without it when, twice in 30 years, it had its companies later stripped from their patents by other countries.

Just out of interest, are you making an argument that patents and intellectual property protection were not historically necessary or beneficial?

 

[innonimatu]

Just out of interest, are you making an argument that patents and intellectual property protection were not historically necessary or beneficial?

Of course they weren't necessary. Whether or not they were beneficial is open for discussion, but it requires, first of all, specifying beneficial for what and for whom.

 

[Aleksey_aka_al]

Long answer: no, because scarcity is the core of economics and removing it from the equation would alter human society so radically that no system to date (and possibly no system even imaginable to someone living in scarcity-based society) would be truly compatible.

I felt it so deep when played Haven&Hearth...

 

[El_Machinae]

I have a very hard time envisioning post-scarcity, mainly because I don't think it can exist. People will push solar panels above yours, blocking the Sun. You won't be able to buy the raw materials. At that point, you'll have nothing to offer. No way of purchasing essentials.

 

[Traitorfish]

I have a very hard time envisioning post-scarcity, mainly because I don't think it can exist. People will push solar panels above yours, blocking the Sun. You won't be able to buy the raw materials. At that point, you'll have nothing to offer. No way of purchasing essentials.

That doesn't seem to be an argument against the possibility of post-scarcity as such, but against the compatibility of post-scarcity with a market-based form of society. The suggestion seems to be that the barrier to post-scarcity is social rather than material- unless I'm misinterpreting?