TOC Must the market be a marked man? Your Turn

"I say what I think and I do what I say". If this is how Nicolas Sarkozy intends to differentiate himself from other contenders to the French Presidency (1), it speaks volume about Confucius' wisdom in stressing the rectification of names: "if language is not correct, then what is said is not what is meant." Such an ideal however is more elusive than one would like to think. Having used that quote before (see 7/11/06 fillip), I found out to my dismay that I have in the past written, positively, about "markets" (see 6/13/06 fillip) as if this term was well understood.

What has not been my surprise indeed when I followed Paul Miller's advice (*) and started reading Yochai Benkler's recent book on the economy of the Information Age (**). New Adam Smith, the author studies in depth what are the stakes behind Internet-induced decentralization. I do not intend here to review his work, indeed I cannot as I have still to reach the end. But let me give two reasons to recommend this book without delay:

  • the author bases his inquiry on the enabling of individuals as effective information producers, showing a robust sense of priorities
  • he takes up the issue of how information can be filtered and recommended, "accreditation" is his term (see p 68), again hitting on the right key
The surprise then came as Yochai Benkler proceeds to take "the market" to task and, together with intellectual property rights, presents these notions as little more than obstacles from some dark past we ought to overcome. To get in the right mood, read these quotes:
  • "The changes have increased the role of non-market and non proprietary production" (p 2)
  • "This is not to say that property is in some sense inherently bad" (p 23) (2)
I can hardly expect to enlist Yochai Benkler, can I, to accredit my insights in defense of eprivacy:
  • individuals should be granted title to their confidential data just like brands, which enjoy all kinds of proprietary rights
  • this would enable newly entitled individuals to engage in vigorous exchanges on markets to be created for the purpose
How can we reach such radically opposed positions when it is obvious we are both interested in liberating the individuals and wary of the influence of institutional players? I am wont to point to abuses by advertisers, governments and lawyers. Yochai Benkler may not be in a position to withdraw his faith from lawyers, but he surely shows no great love for "the incumbents", i.e. large mass media companies, and little hope in the governments, which "could play constructive roles, if [they] stopped listening to incumbents for long enough" (p 21).

Like in a good detective novel, here are two clues taken from the Wealth of Networks:

  • "a good deal more that human beings value can now be done by individuals, who interact with each other socially,[...] rather than as market actors through the price sytem", a quote from page 6
  • "non market transactional frameworks", an expression which recurs six times throughout the book (e.g. p 18)
Could it be that Yochai Benkler equate markets with price systems, surrendering the definition of what constitutes a market to the economic forces of yesterday? Could it be that, deprived of the correct word, he is compelled to resort to a rather clunky periphrase? Isn't it time to look up what in the context ought to be an unimpeachable reference, i.e. the Wikipedia?

According to this source, "price adjustments" are generally used by markets but this does not exclude "various other types". Without making any reference to prices, the Wikipedia defines a market as "a social arrangement that allows buyers and sellers to discover information and carry out a voluntary exchange of goods and services". In other words Yochai Benkler's "non market" is still a market.

Yet I have nothing to boast about. As I review past fillips (see 5/09/06, 6/13/06, 6/20/06, 7/18/06), I find readers quite justified in thinking I had price-based markets in mind. In the light of this exercise in name rectification, I must issue a clarification. As parties match peer to peer fashion as a condition for an exchange on new markets, their mutual interest will be based on many criteria, which may or may not include price considerations.

As parties exchange goods for goods on barter markets and goods for money on price-based markets, they exchange goods for value (3) on the new markets studied by Yochai Benkler. In specific cases of such value-based markets, the author suggests that turning price into an explicit criteria may actually destroy value (see p 95). This important point independently supports Philippe d'Iribarne's thesis about French labor markets.

On ePrio's peer to peer matching platform, the exact nature of matching criteria is in the hand of so-called domain makers. The latter are completely free to pick the most effective set. As for their own motivation, nothing constrains it, not even the nature of the market concerned. How therefore could one censor attention-based marketing, assuming participants truly exchange time for money rather than fall victims to the forces of social engineering (see 7/25/06 fillip)? If an actual release of personal data is to take place, I suspect most market participants will in exchange seek opportunities and recommendations rather than money, although I find perfectly legitimate to ask money for contributing to some market research.

Which leads to a word of caution. The emergence of value-based markets should not be taken as a license to attack price-based markets, let alone clear intellectual property rights. Whether at a price or for value, how could I dare contribute something which is not mine? And if it is mine, why should I be prevented from assessing its value to me, as long as others remain free of their own value assessment? When Yochai Benkler points to the vanishing marginal costs of information reproduction to argue against property rights , isn't he providing us with another example of value destruction from pricing, albeit at a null price?

I stress the damage caused by imperfect and asymmetric markets. I share Yochai Benkler's dismay at the greed of large mass media corporations for "strong exclusive rights" (p 44). I agree that society itself has rights, which impose limits to individual rights in this matter as well as any other aspect of behavior. But were he to abolish intellectual property rights altogether in the name of economics, I would beg to differ.

Beware of dogmatic thought, especially in economics. In the High Middle Ages "all science belonged to God and therefore could not be sold". How intellectuals successfully fought to gain the right to be paid for teaching has been documented by Jacques Le Goff (4). Without this intellectual property right, western universities could not have appeared and prospered in Italy first, then France during the XIth-XIIIth century renaissance. Without this property right, Yale today would perhaps be a Benedictine abbey. Which Yale parent would object to the suppression of tuition? All in keeping with economic efficiency, the marginal cost of a monk's time being quite low.

Philippe Coueignoux

  • (*).. The Wealth of Networks: How Social Production Transforms Markets and Freedom, by Yochai Benkler (Yale Law School) - 2006, 512 pages
  • (**).. Net gains, by Paul Miller (Financial Times) - July 7, 2006
    • (1) Ségo and Sarko take lessons in the art of 'life politics', by John Thornhill (Financial Times) - July 2006
    • (2) Unless Benkler felt alert readers would inevitably draw this conclusion, no denial needed to be issued.
    • (3) "goods" in this sentence is short for "goods or services"
    • (4) Un autre Moyen Age, by Jacques Le Goff - Gallimard 1999
July 2006
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