Interesting review - I’ll be sure to get the book. I have to disagree with one part of the argument though: the marginal cost of reproducing an information good is never zero. The problem with the argument is that it imagines an infinite number of copies. But that’s daft. In the real world, there will never be an infinite number of copies, because we have no use for an infinite number of copies. Even if every person on the planet wants a copy of Cory’s latest, that’s still only a few billion. So the marginal cost might be small, but it’s not zero. And if it’s not zero, we still have to figure out how that cost is borne. Someone’s labour still matters.
(BTW the link to the forum seems to be missing from the post)
It’s also worth remembering that data costs money to store (the original on the servers and in the archives of those who own the copyright as well as locally for the customer) and to transmit.
When being transmitted, the same data gets paid for numerous times - paid for by the selling entity as part of their hosting solution, paid for by ISPs with their peerage agreements (either exchanging data for data or cash) as that data traverses their networks and then paid for by the customer to their ISP.
There’s only so many people to want copies or machines to run copies on - so you’re approaching a limit. Back to my high school math class!
Isn’t that confusing the theoretical cost of production with the real cost? In real terms, yeh, you would divide by 7 billion if you were providing a copy to everyone alive on the planet but, ignoring real demand, you could theoretically keep producing copies for the rest of eternity without further adding to the cost of manufacture.
Obviously, you’d have to come up with some way to counter the eventual heat death of the universe, but provided you did that there is theoretically no upper limit to the number of copies you could produce once you had overcome the initial production cost.
A book is perhaps a bad example; in an online shooter, once the cost of design, manufacture and hosting has been accounted for, it makes no difference to the developer how many bullets each player fires. The cost of the information representing the bullets is 0, given that there is no upper limit to the number that can be used as there is no extra production cost to firing more of them once the code has been created. The game itself has a finite limit to the number of consumers and therefore holds value, but the production cost of the bullets fired within the game is 0 because they are essentially “pure” information.
The fact that you could theoretically keep producing it forever is irrelevant, because you never will. Our digital goods have a lifespan that’s actually much shorter than most people realize. For example, a video game only has a useful lifespan of a few years, before the platform it works on becomes obsolete. It might have a long tail of dedicated players who keep using it for longer, but not for more than a decade or two. So again, even your bullet example doesn’t work. The only way you can have an infinite number of bullets fired in a game that has a finite number of users and a finite useful lifespan is if you don’t understand mathematics.
Even digital bullets can’t be “infinite” because of costs. You have to RUN the game on a machine capable of keeping track of them. Those of us who are old remember playing the arcade game “space wars” where each player could only have 4 shots on the screen at any one time because of the hardware limitations of the machine…
Why would I need the individual cost of the good? That number is irrelevant. The magnitude of the marginal cost is what matters, but only relative to the marginal revenue, the incremental revenue from selling the unit, which depends on the demand of individuals. So, even with marginal cost equal to zero you can still get a positive price because you will never produce until fixed costs are equal to zero. You will produce until the last consumer’s contribution to revenue is equal to the marginal cost. That does not mean that prices are equal to zero. They are always still positive.
Just because somethings costs nothing in marginal costs does not present a great challenge to markets.
I fear that te future is feudalism with the corporation being the lords of us all. Is future now?
But this isn’t about running costs, it’s about theoretical costs of production of individual units.
If you have a machine that can make 100 lightbulbs for $100, the production cost of each lightbulb is one dollar, regardless of the cost of actually using those lightbulbs. If the same machine could produce 100 billion of those lightbulbs for the same cost, the cost of production is so near-zero as to be effectively zero. It doesn’t matter that those lightbulbs still cost money to use, they cost nothing to produce and therefore hold no economic value in a Marxist sense, beyond what you can convince people to pay for them.
These are extreme examples meant to demonstrate an underlying idea, which is that as a society generates more and more of its products with methods that gradually approach zero production cost, the idea of an object holding value because it cost X amount of labour and Y amount of resources (the basis of economics of scarcity) begins to apply less and less. Information has no inherent reproduction cost; it doesn’t cost me any more if I’m watching a movie on my PC or uploading it to a thousand people via bittorrent in the same time period because my PC is still switched on. Similarly, if you fire one bullet or a million bullets in the same timeframe in the hypothetical game, it makes no difference in terms of the running costs of the game and the bullets have a production cost of zero.
As labour is replaced by automation and as production techniques get better, the idea of scarcity (I.E. the idea that there are only a finite amount of man hours to produce goods, and a finite amount of resources, which in turn take man hours to gather) becomes less and less relevant.
Obviously, that doesn’t scale down to zero overnight, but you can see the effect in the price of goods over the last century. This is especially true in the case of information. How much would a resource like Wikipedia have cost to produce in 1900, and how much do you think it would have fetched as a non-replicable physical good on the open market? The reason it can be offered for nothing is that each page impression costs effectively nothing to send to you; Wikipedia has running costs, such as electricity, hosting and bandwidth, but the cost of reproducing the page you are looking at is effectively zero.
Between the takedown of the technology portion of this book here and the takedown of the economic portion by a Marxist critic http://marxistworld.net/2015/09/paul-masons-postcapitalism-a-critical-review/
I am beginning to think this may not be worth reading.
Laughable considering the app I’m trying to have made at a reasonable cost has been quoted on-shore here at around $150,000 and off-shore without support at about 10-15% of that.
Coding and bug fixing costs money.
It’s never been anything but.
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