Nobel Prize in Anarchy

For awhile now I've been saying that economists should be paying attention to open-source and other commons-based models of production. How often does a radically new way to organize production come along, after all? It seems like academic economists should be studying the hell out of it. There are some books by Yochai Benkler and Steven Weber but they barely scratch the surface.

I was making this argument to Herbert Gintis, a prominent political scientist with a good book-review blog on Amazon. Gintis is a smart guy but has some weird blind spots (Israel and open source, for starters) which I could not resist poking at. Anyway, in the middle of the conversation, the Nobels in Economics were announced. I had never heard of the awardees but it turns out that one of them, Elinor Ostrom, won it specifically work on the structures of economic governance for in-common resources such as fishery stocks, water resources, and also "knowledge commons" such as open-source software projects. Huzzah! Well, I felt somewhat vindicated and also somewhat embarrassed to find that the economics profession was actually ahead of my recommendations. On the other hand, Ostrom is not an economist, she's in political science, and apparently a couple of famous economists who write for the New York Times were unfamiliar with her as well. Gintis was very familiar with her work but for whatever reason that didn't seem to affect his view of open source as economically trivial.

One of the famous economists who had not heard of Ostrom, Steven Levitt said: "...the short answer is that the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama." I'm not sure that's true. I see many libertarians on the net trying to get in front of this wave, even though her work is essentially a complete refutation of the libertarian framework of thought.

Libertarianism is erected on a foundation of individual rights, private property, self-interest, and markets. Notice what's missing? Any notion of society and in particular institutions, the very thing both of this years laureates were studying. People like Somin would like to think that because the institutions Ostrom is studying are not (in general) states that she's on his side. But Ostrom's work (OK, I haven't actually read it yet so I'm just going on net commentary) has more in common with critics of capitalism such as Karl Polanyi and left-anarchist theorists of cooperation like Kropotkin.

On reading some more of the Hayekian blogs I fear I may be doing an injustice to them (and maybe Ostrom), probably because I tend to conflate idiocies of net.libertarians with the more sophisticated theories of academics. Perhaps her work transcends left and right, which wouldn't bother me, those categories from the French Revolution seem to be increasingly stale. Not that they don't have some validity but for the last hundred years or so the two sides seem to spend most of their time taking on each other's worst characteristics. It would be nice to have some new ideas about how society should be governed and it would be nice to have those solidly grounded in empirical research. Ostrom's work seems to fit the bill.

One question I have is how these cooperatively-owned resources enforce their rules. For things like fisheries, there are community and peer enforcement of rules, but at some scale this turns into a state or something indistinguishable from it, I would think. Of course, with informational commons like Wikipedia or open-source their is no scarcity and hence no need to patrol for cheaters. Unfortunately we can't yet eat information, so the extension of open-source models to the physical world is questionable.

Some links:
Ostrom's win is a blow against simplistic private, market-based economies.

Academics debate just how Hayekian Ostrom's work is.

Creative Commons notices.

Here's Ostrom talking on "Beyond the Tragedy of the Commons":


I note she cautions against "top-down solutions".

Guard labor and open source

According to this paper by Samuel Bowles and Arjun Jayadev, an astonishing 26% of the US workforce in 2002 was engaged in non-productive "guard labor", meaning their work was not directed towards producing goods or services but was instead aimed at making sure that the wrong people did not help themselves to slices of economic pie that they were not supposed to have.

Compare this to 11% in contemporaneous Sweden, or 7% in the US in 1929.

I'd argue with some of the definitions and methodology in the paper, in both directions. For instance, supervisors are the largest category of guard labor, but it's hard to say that all of management is non-productive -- they aren't all PHBs, many make creating contributions other than merely riding herd on their employees (ie, they are thinking of someone like a low-level manager in a call center whose only job is to make sure employees don't stay too long on their bathroom breaks -- but there is also, say, Steve Jobs). On the other hand, there are entire industries that are effectively engaged in guard labor that are not counted in Bowles and Jayadev's measure, such as health insurance. And the finance industry is neither productive nor guard labor (I wonder what percentage of the economy is skimmers and con artists?).

Prisoners and the unemployed are also counted in the numbers for guard labor, because the concept depends on the idea of power and sanction, and prisoners and the unemployed are considered "necessary concomitants of the public and private sanctioning systems, respectively". This struck me as odd, but makes some sense when taking a macroeconomic point of view -- both the guards and the prisoners are people who are not doing actual economically productive work -- their labor is wasted as a direct result of the fact that the social system of power and property needs to be upheld.

Ideally we would also include those producing guns for private use, locks, security systems and the like, but we are not able to do so because of the lack of data.

The need for guard labor is related to the broader goal of understanding the role of institutions in the role of managing and reproducing the economic activity of society:

The insight we wish to develop is that securing conformity to institutions can be quite costly, and the cost differs among institutions and across time and space. Conformity achieved through the coordination of expectations or the internalization of norms, for example, may not be very costly, as in the case of driving on one side of the road or the other, or the voluntary compliance with tax laws in some countries. However, where conformity to a society'™s institutions is secured primarily through governmental coercion or privately deployed sanctions,the resource costs may be substantial. Examples include some authoritarian political systems, colonial regimes, and as we will see, highly unequal capitalist economies.

Intuitively, the more inequality in a society, the more guard labor it requires. There's a convincing scatterplot of GINI vs. guard labor fraction by US state included in this quite good profile of Bowles in a Santa Fe paper.

Prior to about 20 years ago, most economists thought that inequality just greased the wheels of progress. Overwhelmingly now, people who study it empirically think that it's sand in the wheels.

Here's the last paragraph of the paper:

Fourth, illegitimate inequalities are costly to sustain. While cultures often justify vast differences in power and access to valued resources, the mind is not a blank slate on which such ideas as the divine right of kings or the superiority of the "˜white race" can be etched at will. Two decades of behavioral experiments have provided convincing evidence that humans in dozens of cultures are inequality averse, and that violations of norms or reciprocity often lead to costly confl‚icts.

Of course the counterargument to the view that guard labor is mere friction is pretty easy to make -- that all this guarding is actually necessary to make producers productive, via incentives and structuring. The ticket-taker at the movie theater produces nothing, but without the efforts of him and others, the actual movie-makers could not get paid and could not raise capital to produce anything. It might be more efficient to have a different scheme, for instance having entrance to the movies be free and producers supported by the government via taxation. That may sound absurd or totalitarian but just such a change is happening in academic publishing via the Open Access movement and free-access journals like PLoS. Institutions that did nothing but provide proprietary guards over content (like my former employer Elsevier) are on their way out.

In fact, the whole free/open source movement in software and elsewhere may be seen as a response to the unpleasantness of guard labor. Proprietary software requires licensing schemes (ticket-takers) that cause new bugs, interfere with legitimate uses, and more generally cause friction. More broadly, locking software behind a pay wall reduces the amount of sharing and requires frequent reinvention of the wheel. It's inefficient, and this drives engineers crazy. Most of the time they don't get to vote, but the FOSS movement arose as a direct response to some of the unpleasantness surrounding proprietary software and has in its way been amazingly successful.

Guard labor is in its most purest and most apparently wasteful form when it is guarding digital content. The question is why then, if our economy is more involved in producing content than ever before, is the fraction of guard labor so high? I suppose it is also true that guarding digital content takes more effort than guarding physical objects -- how much of the fraction is RIAA lawyers, or the army of private detectives employed by Monsanto to sue small farmers who allegedly use their genetically modified seed without paying (genes are basically digital content -- and I just watched Food, Inc. which goes into this story). Monsanto, like DRM, is friction, but capitalists would argue that it such friction is necessary to spur production. But there can't be all that many people employed doing this kind of work.

I was around for the birth of the open source movement and efficiency really had nothing to do with it -- it was a moral struggle, based on the anguish of the excluded when a once open resource suddenly being subject to enclosure and guarding. But its ongoing success happened because of efficiency and the self-interest of software producers and companies. It is interesting to hear arguments for more general economic equality and openness, usually derived from a moral or emotional basis, being made on the basis of macro-scale efficiency.

[[edit: I was constructivly flaming Bowles' frequent collaborator Herbert Gintis on open-source here]]

What's on my mind

Messing around with some computational language tools, I generated this list of words which are more frequent on this blog relative to a standard corpus (some misspellings removed), in order from most overused. Many of these are unsurprising, but I had no idea I used "cannot" more than is normal. Or "parasitical", which is more worrying.

cannot simpleminded parasitical excoriate delegitimize kvetching temperamentally treacly politcs cosmopolitans authoritarians twitter rightwingers inexpert constructivists constructionists entertainingly clathrate undesireable frenzies mystifies wastefulness repurpose gintis wobblies kunstler turmoils bukovsky bankrolls laitin smidgeon sociopaths scienceblogs cleavon oddsmaker vegetating reifying situationists doper yecs popularizer nobels cultish solidary arduino militarist prolixity congealing proft larded atran nixonian seatmate appeaser rationalists leftish libertarianism literalist materialist vitalism rejoinders schuon fusty facebook torahs arduously hugeness universalizing tinkerers factuality autoworkers parasitize rationalist dominionism physicalist incarnating idiocies axiomatically ferreted gourevitch glaringly symbiote averagely incisively shitheads skimped netzach appall metonymic onrush chokehold halldor churchy scampers starkest agentive dalliances emet mistimed ceasefires hallucinated reimagined overplaying bioethicist copleston disempower flippancy oversimplifies outrageousness indvidual ginned douchebags explicates plumbs mencius metaphysically schelling foregrounding polarizes outlives subtexts acquiesces nostrums undescribable malkuth marketeer analagous preeminently remediable flamers slipperiness bunraku proles burkean peaceniks materialists unaccountably athwart mcworld petraeus romanticizing unnamable huffpo ineffectually commonsensical interoperating empathizing wingnut supplicants hypostasis inchoate obama transhumanists fulminate affordance nonviolently geneological gashed mussed chuppah charnel felin reconstructionism verbalizing tegmark crabbed armys shalizi dehumanization hoohah vannevar copyable bungler unlikeliest preindustrial legitimated downscale fugs bilin slavering egomania naveh determinedly oligarchies chasten reappropriated bekki taleb bioethicists valdis ultraconservative wahabi straussian rewatch anthropomorphism ecstasies libertarians ruination exceptionalism vacillate overreach forthrightness informationally bushites rottenness biomorphic parceled twittering sorley parapsychological irreligious statists maddeningly selfing militarists bushite infuriates deconstructionist dallying harrows glutted worths misplacement engross jewishness hearkens girdled zombified prohibitionist braf sniggering positivists prostrating doomy schmaltzy yesod hewing philosophize doomsayers unconcern conflate jibes misappropriate convulse constructionist relabeled cavalierly mesmeric phantasms atrophied nattering reductionist personhood asocial placating incuding amorality incontestable weida greybeard inescapably scrabbling foreordained puthoff antiabortion commandeering iphone reinterpreting fudges minsky spluttering obsessional explicating rovian subdues ascription graeber counterargument plops

Now I'm playing the Burroughs-ish game of trying to find meaning in this shredded language. "physicalist incarnating idiocies axiomatically" sounds applicable to a number of discussions I've been having lately.