The Wealth of Networks: How Social Production Transforms Markets and Freedom

I normally write extensive reviews of the books I read. I’m not able to do this with this book. Yochai Benkler’s book is so comprehensive in scope and detail (515pp) that it defies summarization. Suffice it to say that this is the authoritative book on the subjects of networks and social production. It’s a difficult read (the academic language) but rewards the reader with an unsurpassed view of the landscape it covers. In the author’s own words in the acknowledgments, “Another great debt is to David Grais, who spent many hours mentoring me in my first law job, bought me my first copy of Strunk and White, and, for all practical purposes, taught me how to write in English; as he reads these words, he will be mortified, I fear, to be associated with a work of authorship as undisciplined as this, with so many excessively long sentences, replete with dependent clauses and unnecessarily complex formulations of quite simple ideas.” Lawrence Lessig comments, “In this book, Benkler establishes himself as the leading intellectual of the information age.”

What is written here is my attempt to cover the salient points of the introduction.

He begins with, “Information, knowledge, and culture are central to human freedom and human development. How they are produced and exchanged in our society critically affects the way we see the state of the world as it is and might be; who decides these questions; and how we, as societies and polities, come to understand what can and ought to be done. For more than 150 years, modern complex democracies have depended in large measure on an industrial information economy for these basic functions. In the past decade and a half, we have begun to see a radical change in the organization of information production. Enabled by technological change, we are beginning to see a series of economic, social, and cultural adaptations that make possible a radical transformation of how we make the information environment we occupy as autonomous individuals, citizens, and members of cultural and social groups. It seems passe´ today to speak of “the Internet revolution.” In some academic circles, it is positively naıve. But it should not be. The change brought about by the networked information environment is deep. It is structural. It goes to the very foundations of how liberal markets and liberal democracies have coevolved for almost two centuries.

A series of changes in the technologies, economic organization, and social practices of production in this environment has created new opportunities for how we make and exchange information, knowledge, and culture. These changes have increased the role of nonmarket and nonproprietary production, both by individuals alone and by cooperative efforts in a wide range of loosely or tightly woven collaborations. These newly emerging practices have seen remarkable success in areas as diverse as software development and investigative reporting, avant-garde video and multiplayer online games. Together, they hint at the emergence of a new information environment, one in which individuals are free to take a more active role than was possible in the industrial information economy of the twentieth century. This new freedom holds great practical promise: as a dimension of individual freedom; as a platform for better democratic participation; as a medium to foster a more critical and self-reflective culture; and, in an increasingly information dependent global economy, as a mechanism to achieve improvements in human development everywhere.

The rise of greater scope for individual and cooperative nonmarket production of information and culture, however, threatens the incumbents of the industrial information economy. At the beginning of the twenty-first century, we find ourselves in the midst of a battle over the institutional ecology of the digital environment. A wide range of laws and institutions— from broad areas like telecommunications, copyright, or international trade regulation, to minutiae like the rules for registering domain names or whether digital television receivers will be required by law to recognize a particular code—are being tugged and warped in efforts to tilt the playing field toward one way of doing things or the other. How these battles turn out over the next decade or so will likely have a significant effect on how we come to know what is going on in the world we occupy, and to what extent and in what forms we will be able—as autonomous individuals, as citizens, and as participants in cultures and communities—to affect how we and others see the world as it is and as it might be.”

He explains the emergence of the networked information economy, “The most advanced economies in the world today have made two parallel shifts that, paradoxically, make possible a significant attenuation of the limitations that market-based production places on the pursuit of the political values central to liberal societies. The first move, in the making for more than a century, is to an economy centered on information (financial services, accounting, software, science) and cultural (films, music) production, and the manipulation of symbols (from making sneakers to branding them and manufacturing the cultural significance of the Swoosh). The second is the move to a communications environment built on cheap processors with high computation capabilities, interconnected in a pervasive network—the phenomenon we associate with the Internet. It is this second shift that allows for an increasing role for nonmarket production in the information and cultural production sector, organized in a radically more decentralized pattern than was true of this sector in the twentieth century. The first shift means that these new patterns of production—nonmarket and radically decentralized—will emerge, if permitted, at the core, rather than the periphery of the most advanced economies. It promises to enable social production and exchange to play a much larger role, alongside property- and market based production, than they ever have in modern democracies.”

He makes three observations about this emergence:

1. Nonproprietary strategies have always been more important in information production than they were in the production of steel or automobiles, even when the economics of communication weighed in favor of industrial models.
2. We have in fact seen the rise of nonmarket production to much greater importance. Individuals can reach and inform or edify millions around the world. Such a reach was simply unavailable to diversely motivated individuals before, unless they funneled their efforts through either market organizations or philanthropically or state-funded efforts.
3. And, likely most radical, new, and difficult for observers to believe, is the rise of effective, large-scale cooperative efforts—peer production of information, knowledge, and culture.

He states that individuals have enhanced autonomy: “The networked information economy improves the practical capacities of individuals along three dimensions: (1) it improves their capacity to do more for and by themselves; (2) it enhances their capacity to do more in loose commonality with others, without being constrained to organize their relationship through a price system or in traditional hierarchical models of social and economic organization; and (3) it improves the capacity of individuals to do more in formal organizations that operate outside the market sphere. This enhanced autonomy is at the core of all the other improvements I describe. Individuals are using their newly expanded practical freedom to act and cooperate with others in ways that improve the practiced experience of democracy, justice and development, a critical culture, and community.”

The major battle to be fought is between open and proprietary models. “The battle over the relative salience of the proprietary, industrial models of information production and exchange and the emerging networked information economy is being carried out in the domain of the institutional ecology of the digital environment. In a wide range of contexts, a similar set of institutional questions is being contested: To what extent will resources necessary for information production and exchange be governed as a commons, free for all to use and biased in their availability in favor of none? To what extent will these resources be entirely proprietary, and available only to those functioning within the market or within traditional forms of well funded nonmarket action like the state and organized philanthropy? We see this battle played out at all layers of the information environment: the physical devices and network channels necessary to communicate; the existing information and cultural resources out of which new statements must be made; and the logical resources—the software and standards—necessary to translate what human beings want to say to each other into signals that machines can process and transmit. Its central question is whether there will, or will not, be a core common infrastructure that is governed as a commons and therefore available to anyone who wishes to participate in the networked information environment outside of the market-based, proprietary framework.”

He writes about four choices: “There are four methodological choices represented by the thesis that I have outlined up to this point, and therefore in this book as a whole, which require explication and defense. The first is that I assign a very significant role to technology. The second is that I offer an explanation centered on social relations, but operating in the domain of economics, rather than sociology. The third and fourth are more internal to liberal political theory. The third is that I am offering a liberal political theory, but taking a path that has usually been resisted in that literature—considering economic structure and the limits of the market and its supporting institutions from the perspective of freedom, rather than accepting the market as it is, and defending or criticizing adjustments through the lens of distributive justice. Fourth, my approach heavily emphasizes individual action in nonmarket relations. Much of the discussion revolves around the choice between markets and nonmarket social behavior. In much of it, the state plays no role, or is perceived as playing a primarily negative role, in a way that is alien to the progressive branches of liberal political thought. In this, it seems more of a libertarian or an anarchistic thesis than a liberal one. I do not completely discount the state, as I will explain. But I do suggest that what is special about our moment is the rising efficacy of individuals and loose, nonmarket affiliations as agents of political economy. Just like the market, the state will have to adjust to this new emerging modality of human action. Liberal political theory must first recognize and understand it before it can begin to renegotiate its agenda for the liberal state, progressive or otherwise.”

This book is well worth studying and would make a great text for discussion group. If anyone out there has read the book and would like to collaborate on such an endeavor, please let me know.

The Wealth of Networks: How Social Production Transforms Markets and Freedom, Yochai Benkler, Yale University Press, 2006, 515pp

The Wealth of Networks (PDF)

Wealth Gaps Yawns - and So Do the Media

"Last March, the Insight Center for Community Economic Development released the revelatory report "Lifting as We Climb: Women of Color, Wealth, and Americas Future;' which measures wealth gaps according to gender and race. The results are a national embarrassment, but it's a good guess that you missed the story-because almost no one deemed the data newsworthy."

This article in Utne Reader, September - October, 2010 is well worth reading. As a matter of fact the whole edition is full of valuable information for anyone interested in what's happening to the U.S.

A number of years a go, I got interested in this topic because I perceived that I had just lived through the greatest redistribution of wealth in my life time. And, I had just learned about a new tool to display data, the Motion Chart created by Hans Rosling. Google has the official public version of the tool in its Google Gadgets.

I posted this on my Ning site earlier, but lost it when Ning starting charging. I got the data from the Federal Reserve Board. I had the link to the report, but the report is no longer there (curious). I had hoped I could update the data beyond 2004. There is some data and analysis on Wikipedia but it also ends in 2004.

Personal assets are plotted as a function of personal income by percentile of income. Data was available from 1989 to 2004. You can increase the size of the chart by clicking on the expand symbol in the bottom right hand corner of the video.




What this Motion Chart shows is how much faster wealth and income has grown for the upper percentile of U.S. citizens. What the article and the Wikipedia article talk about is how this is accentuated for women and people of color.

You can download a copy of the video here. By the way, the Google Gadget provides an embeddable flash file, but Blogger wouldn't accept it.

Autonomy

Yochai Benkler has written a masterful book on social production and networks. As I read this section last night I was struck with the thought that autonomy is the unspoken word at the center of a lot of controversy in our society. The conversation should be focused on autonomy overtly:

• How much autonomy is required for individual freedom?
• When does my autonomy begin to impinge on yours?
• How does my autonomy empower yours?
• What’s the boundary between my autonomy and limits placed by government, corporate and religious interests?
• How do government, corporate and religious entities empower my autonomy?
• How do we protect the personal autonomy that is emerging through the Internet, social production and web 2.0 software?
  

“The autonomy deficit of private communications and information systems is a result of the formal structure of property as an institutional device and the role of communications and information systems as basic requirements in the ability of individuals to formulate purposes and plan actions to fit their lives. The gains flow directly from the institutional characteristics of commons. The emergence of the networked information economy makes one other important contribution to autonomy. It qualitatively diversifies the information available to individuals. Information, knowledge, and culture are now produced by sources that respond to a myriad of motivations, rather than primarily the motivation to sell into mass markets. Production is organized in anyone of a myriad of productive organizational forms, rather than solely the for-profit business firm. The supplementation of the profit motive and the business organization by other motivations and organizational forms-ranging from individual play to large-scale peer-production projects-provides not only a discontinuously dramatic increase in the number of available information sources but, more significantly, an increase in available information sources that are qualitatively different from others.

Imagine three storytelling societies: the Reds, the Blues, and the Greens.

Each society follows a set of customs as to how they live and how they tell stories. Among the Reds and the Blues, everyone is busy all day, and no one tells stories except in the evening. In the evening, in both of these societies, everyone gathers in a big tent, and there is one designated storyteller who sits in front of the audience and tells stories. It is not that no one is allowed to tell stories elsewhere. However, in these societies, given the time constraints people face, if anyone were to sit down in the shade in the middle of the day and start to tell a story, no one else would stop to listen. Among the Reds, the storyteller is a hereditary position, and he or she alone decides which stories to tell. Among the Blues, the storyteller is elected every night by simple majority vote. Every member of the community is eligible to offer him- or herself as that night's storyteller, and every member is eligible to vote. Among the Greens, people tell stories all day, and everywhere. Everyone tells stories. People stop and listen if they wish, sometimes in small groups of two or three, sometimes in very large groups. Stories in each of these societies play a very important role in understanding and evaluating the world. They are the way people describe the world as they know it. They serve as testing grounds to imagine how the world might be, and as a way to work out what is good and desirable and what is bad and undesirable. The societies are isolated from each other and from any other source of information.

Now consider Ron, Bob, and Gertrude, individual members of the Reds, Blues, and Greens, respectively. Ron's perception of the options open to him and his evaluation of these options are largely controlled by the hereditary storyteller. He can try to contact the storyteller to persuade him to tell different stories, but the storyteller is the figure who determines what stories are told. To the extent that these stories describe the universe of options Ron knows about, the storyteller defines the options Ron has. The storyteller's perception of the range of options largely will determine the size and diversity of the range of options open to Ron. This not only limits the range of known options significantly, but it also prevents Ron from choosing to become a storyteller himself. Ron is subjected to the storyteller's control to the extent that, by selecting which stories to tell and how to tell them, the storyteller can shape Ron's aspirations and actions. In other words, both the freedom to be an active producer and the freedom from the control of another are constrained. Bob's autonomy is constrained not by the storyteller, but by the majority of voters among the Blues. These voters select the storyteller, and the way they choose will affect Bob's access to stories profoundly. If the majority selects only a small group of entertaining, popular, pleasing, or powerful (in some other dimension, like wealth or political power) storytellers, then Bob's perception of the range of options will be only slightly wider than Ron's, if at all. The locus of power to control Bob's sense of what he can and cannot do has shifted. It is not the hereditary storyteller, but rather the majority. Bob can participate in deciding which stories can be told. He can offer himself as a storyteller every night. He cannot, however, decide to become a storyteller independently of the choices of a majority of Blues, nor can he decide for himself what stories he will hear. He is significantly constrained by the preferences of a simple majority. Gertrude is in a very different position. First, she can decide to tell a story whenever she wants to, subject only to whether there is any other Green who wants to listen. She is free to become an active producer except as constrained by the autonomy of other individual Greens. Second, she can select from the stories that any other Green wishes to tell, because she and all those surrounding her can sit in the shade and tell a story. No one person, and no majority, determines for her whether she can or cannot tell a story. No one can unilaterally control whose stories Gertrude can listen to. And no one can determine for her the range and diversity of stories that will be available to her from any other member of the Greens who wishes to tell a story.

The difference between the Reds, on the one hand, and the Blues or Greens, on the other hand, is formal. Among the Reds, only the storyteller !hay tell the story as a matter of formal right, and listeners only have a choice of whether to listen to this story or to no story at all. Among the Blues and the Greens anyone may tell a story as a matter of formal right, and listeners, as a matter of formal right, may choose from whom they will hear. The difference between the Reds and the Blues, on the one hand, and the Greens, on the other hand, is economic. In the former, opportunities for storytelling are scarce. The social cost is higher, in terms of stories unavailable for hearing, or of choosing one storyteller over another. The difference between the Blues and the Greens, then, is not formal, but practical. The high cost of communication created by the Blues' custom of listening to stories only in the evening, in a big tent, together with everyone else, makes it practically necessary to select "a storyteller" who occupies an evening. Since the stories play a substantive role in individuals' perceptions of how they might live their lives, that practical difference alters the capacity of individual Blues and Greens to perceive a wide and diverse set of options, as well as to exercise control over their perceptions and evaluations of options open for living their lives and to exercise the freedom themselves to be storytellers. The range of stories Bob is likely to listen to, and the degree to which he can choose unilaterally whether he will tell or listen, and to which story, are closer, as a practical matter, to those of Ron than to those of Gertrude. Gertrude has many more stories and storytelling settings to choose from, and many more instances where she can offer her own stories to others in her society. She, and everyone else in her society, can be exposed to a wider variety of conceptions of how life can and ought to be lived. This wider diversity of perceptions gives her greater choice and increases her ability to compose her own life story out of the more varied materials at her disposal. She can be more self-authored than either Ron or Bob. This diversity replicates, in large measure, the range of perceptions of how one might live a life that can be found among all Greens, precisely because the storytelling customs make every Green a potential storyteller, a potential source of information and inspiration about how one might live one's life.

All this could sound like a morality tale about how wonderfully the market maximizes autonomy. The Greens easily could sound like Greenbacks, rather than like environmentalists staking out public parks as information commons. However, this is not the case in the industrial information economy, where media markets have high entry barriers and large economies of scale. It is costly to start up a television station, not to speak of a network, a newspaper, a cable company, or a movie distribution system. It is costly to produce the kind of content delivered over these systems. Once production costs or the costs of laying a network are incurred, the additional marginal cost of making information available to many users, or of adding users to the network, is much smaller than the initial cost. This is what gives information and cultural products and communications facilities supply-side economies of scale and underlies the industrial model of producing them. The result is that the industrial information economy is better stylized by the Reds and Blues rather than by the Greens. While there is no formal limitation on anyone producing and disseminating information products, the economic realities limit the opportunities for storytelling in the mass mediated environment and make storytelling opportunities a scarce good. It is very costly to tell stories in the mass-mediated environment. Therefore, most storytellers are commercial entities that seek to sell their stories to the audience. Given the discussion earlier in this chapter, it is fairly straightforward to see how the Greens represent greater freedom to choose to become an active producer of one's own information environment. It is similarly dear that they make it exceedingly difficult for any single actor to control the information flow to any other actor. We can now focus on how the story provides a way of understanding the justification and contours of the third focus of autonomy-respecting policy: the requirement that government not limit the quantity and diversity of information available.

The fact that our mass-mediated environment is mostly commercial makes it more like the Blues than the Reds. These outlets serve the tastes of the majority-expressed in some combination of cash payment and attention to advertising. I do not offer here a full analysis-covered so well by Baker in Media, Markets, and Democracy-as to why mass-media markets do not reflect the preferences of their audiences very well. Presented here is a tweak of an older set of analyses of whether monopoly or competition is better in mass-media markets to illustrate the relationship between markets, channels, and diversity of Content. In chapter 6, I describe in greater detail the Steiner¬Beebe model of diversity and number of channels. For our purposes here, it is enough to note that this model shows how advertiser-supported media tend to program lowest-common-denominator programs, intended to "capture the eyeballs" of the largest possible number of viewers. These media do not seek to identify what viewers intensely want to watch, but tend to clear programs that are tolerable enough to viewers so that they do not switch off their television. The presence or absence of smaller-segment oriented television depends on the shape of demand in an audience, the number of channels available to serve that audience, and the ownership structure. The relationship between diversity of content and diversity of structure or ownership is not smooth. It occurs in leaps. Small increases in the number of outlets continue to serve large clusters of low-intensity preferences-that is, what people find acceptable. A new channel that is added will more often try to take a bite out of a large pie represented by some lowest-common denominator audience segment than to try to serve a new niche market. Only after a relatively high threshold number of outlets are reached do advertiser-supported media have sufficient reason to try to capture much smaller and higher-intensity preference clusters-what people are really interested in. The upshot is that if all storytellers in society are profit maximizing and operate in a market, the number of storytellers and venues matters tremendously for the diversity of stories told in a society. It is quite possible to have very active market competition in how well the same narrow set of stories are told, as opposed to what stories are told, even though there are many people who would rather hear different stories altogether, but who are in clusters too small, too poor, or too uncoordinated to persuade the storytellers to change their stories rather than their props.

The networked information economy is departing from the industrial information economy along two dimensions that suggest a radical increase in the number of storytellers and the qualitative diversity of stories told. At the simplest level, the cost of a channel is so low that some publication capacity is becoming available to practically every person in society. Ranging from an e-mail account, to a few megabytes of hosting capacity to host a subscriber's Web site, to space on a peer-to-peer distribution network available for any kind of file (like FreeNet or eDonkey), individuals are now increasingly in possession of the basic means necessary to have an outlet for their stories. The number of channels is therefore in the process of jumping from some infinitesimally small fraction of the population-whether this fraction is three networks or five hundred channels almost does not matter by comparison-to a number of channels roughly equal to the number of users. This dramatic increase in the number of channels is matched by the fact that the low costs of communications and production enable anyone who wishes to tell a story to do so, whether or not the story they tell will predictably capture enough of a paying (or advertising-susceptible) audience to recoup production costs. Self-expression, religious fervor, hobby, community seeking, political mobilization, anyone of the many and diverse reasons that might drive us to want to speak to others is now a sufficient reason to enable us to do so in mediated form to people both distant and close. The basic filter of marketability has been removed, allowing anything that emerges out of the great diversity of human experience, interest, taste, and expressive motivation to flow to and from everyone connected to everyone else. Given that all diversity within the industrial information economy needed to flow through the marketability filter, the removal of that filter marks a qualitative increase in the range and diversity of life options, opinions, tastes, and possible life plans available to users of the networked information economy.”

The Wealth of Networks: How Social Production Transforms Markets and Freedom, Yochai Benkler, Yale University Press, 2006

Principles of Innovation

The purpose of an organization is to create wealth. Not just wealth in the sense of money, but in its original meaning that is prosperity, well being, and health -- the common weal. And, the organization creates wealth, not just for its owners, but its employees, stakeholders and the community at large. In order to create wealth the organization must innovate.

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Income and Asset of the US (1989 - 2004)

I've been curious about the distribution of personal income and assets in the US. I found a data source at the Federal Reserve Board. However, it's masses of data and complicated spreadsheets. I've been trying to approach the problem as I ordinarily do, with mathematics. But, my experience has been that while I understand the math, few people I ever show it to grasp the real significance. Then yesterday I discovered a great tool and wondered if it would be useful for this application.



The tool was developed by Hans Rosling and is described in the video above and web site. Joyfully, a simple version of the tool is available in Google Gadgets (Motion Chart). it took me awhile to figure out how to use it, but I was rewarded with an interesting visual. It can be viewed here.

If you click on the play button, the data will flow with time. The different colors represent different percentile ranges of income for the US.

What do you see in the data?

What data would you like to see analyzed this way?

How could you use the tool?