Monetization Innovation
Posted Tuesday, January 08 2013
One of the most fascinating new memes to emerge in the last year or two from the econo-web is that of abundance. How is and how will abundance brought on by increased mechanization of production shape economic development? Will it displace labor in the long run or will it open up new avenues for work capable of employing as many (or more) people than the labor it displaces? Will it lead to more leisure for society as a whole? What happens when we can affordably produce a great many things because the tools of production are widely available and/or the marginal costs of production are so low?
First off I should say that this is not a traditional Department of Numbers post. I've got no illuminating time series or chart to go along with this commentary. Instead I'm just offering some minimally filtered thoughts on a subject I'm reading about a lot these days. And this is all a little out there and Star Trek-y as well, so don't take it too seriously.
The Internet is an obvious starting point for thinking about abundance. It is a platform that democratizes the tools of digital production and a place to consume that production as well. When the tools of production are broadly available you have the potential for a relative abundance of whatever it is that is being produced. The digital world may be leading the way here, but for a certain class of goods the physical world is following close behind on a similar trajectory.
The first question to ask then is: what's wrong with abundance? What could possibly be wrong with having access to lots of cheap stuff that we want? I would argue that the main problem with abundance is that it removes that which is abundant from the money economy. Take air or water. Both are obviously critically valuable, but for all intents and purposes we consume them freely. We don't generally participate in a market exchanging money for either one. Thus air and water (and much of the natural environment in general) are an externality in many transactions — their consideration is largely excluded from our money economy. The results of this have arguably led to long term environmental degradation as we have inappropriately valued their worth to us.
Technological abundance, to me, looks like something similar. As we move towards it, we remove that which is technologically abundant from the money economy. And this is where the abundance discussion I see around the web makes me anxious. There is a lot of talk about the gift economy or the collaborative economy — unpaid or minimally paid labor essentially. That is, there is a lot of reasoning why people will increasingly do things for free that will create value for society (and/or corporations). I don't disagree that this will happen; it clearly is happening already at a significant scale. But as with the environment, there will be consequences for inappropriately valuing critical components of our economy. For one, society benefits greatly from the generosity of people participating in some of these unpaid ventures, but yet we still force them to participate in a money economy. You can't pay your rent with Wikipedia edits. Is a world where only certain classes of things are abundant or free really as utopian as it is sometimes portrayed to be, or are we just creating a class of work (and workers) that can be exploited back in the money based economy?
This dilemma makes me think that technological abundance and Tyler Cowen's Great Stagnation are really just two sides of the same coin. One of tenants of the stagnation theme is that "we are not as wealthy as we thought we were." That the booms of the aughts created a lot of fake wealth. But what if we simply don't account for our wealth correctly? What if our current economic system is a really effective heuristic for industrial development but is not complete enough to fit technological abundance under its umbrella? What if the wealth is there but we just haven't figured out an appropriate way to assign that wealth a dollar value? What if we're still a Google without an ad platform or an app developer without an app store? If our current economic platform doesn't monetize what we find valuable, shouldn't we try to extend the framework so that the model doesn't break with abundance? Do we really want a large unmoneyed economy to exist within and compete against the money economy? Because I have a feeling that the money economy wins that fight in the long run. Perhaps the best innovation we could hope for then is a mechanism for monetizing abundance.
