From Each According to his Hard Drive,
To Each According to Bill Gates
by Dr. Hector LaPaunche
The recent prosecutions of internet music file sharing services by the conventional music industry, and the setback the industry received at the hands of an upstart Canajan judge illustrate the point I made in a recent article regarding electricity. In that article I pointed out that the basic failure of electricity restructuring stems from the mistaken belief that it is reasonable to treat grid-provided bulk electricity as if it were an ordinary private good. I went on to argue that this mistake actually opens a Pandora's Box for economic theory, in that there actually are very few goods that are "private" in the sense that is necessary for conventional economic theory to apply.
The criteria for a good to be private are excludability and rivalry - for a good to be able to command a price in private exchange someone else must also want it and only the purchaser is able to derive benefit from the purchase. The single chip that Mark Messier eats in those chip commercials is an example of a pure private good. The packet is already a departure from that strict benchmark.
Recorded music is an excellent example of how the concept of a "private" good disappears on closer inspection. To enjoy it some kind of reproduction device is needed - a gramophone, a tape player, a CD player - which is usually thought of as a normal private consumer good. In addition there is the recording medium itself, the CD or tape that is purchased. On closer analysis neither the device nor the medium are truly private or even close to it. Very little recorded music is for purely private enjoyment. Most involves sharing the experience with other people.
What then, is the difference between people sharing the consumption of recorded music with people in close physical proximity and by file transfer over phone lines? Would the recording industry regard me as breaking copyright if I played my Anachronisms CDs over the phone to a friend?
An unforeseen consequence of the rapid development of the internet is the destabilization of the legal institutions that create and protect private property. The logical extension of the Napster/Kazaa problem is for the assertion of property rights by the recorded music industry over private enjoyment of their product. This would require the authority of the state. Thus, we see that in the name of "free enterprise" the state will be dragged into ever more draconian interventions into the realm of private "freedom". On a global basis the problem is much worse; either a maze of reciprocal agreements to enforce property rights over internet products will be needed or a truly Leviathan World Government.
Thus, the internet could become the unintended catalyst in "squaring the circle"; in erasing any meaningful distinction between a "capitalist" economy, the hallmark of which is the ownership of private property, established by state authority and a "socialist" economy whereby the state directly confers ownership upon itself and re-allocates the benefits amongst the citizenry. Further, to the extent that under either system of "ownership" rights the economy is run by a small number of gigantic corporations, each with its own central planning system, the economic distinction vanishes.
There is a difference in politics, however. The direction of the economy under the socialist model is at least under nominal democratic control. Where democratic government still persists. Under the evolving capitalist model the state would only exist for the purpose of defending and enforcing the rights of the nominally "private" corporations that would effectively control the economy. In such a situation it is highly unlikely that they would not also control the state. We are clearly moving towards a World economy that concentrates economic power in fewer and fewer hands. The failure of the US Justice dept to bring Microsoft to heel only reinforces this feeling.
All hail to Chairman Bill!
Posted April 16, 2004
From Each According to his Hard Drive, to Each According to Bill Gates © Hector LaPaunche, 2004
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