The Strange New World of Information Economics

If I give you 30 bucks, I've got 30 bucks less.

If I copy you some mp3 files, I've got nothing less, and you've got some more music.

Now, if I give you those mp3s, maybe you've got some music you want to share too, and since I've been nice to you and gave you my files, you might want to give me some of your mp3s as well. After all, it's not like you're going to loose anything. To keep in focus we will assume we are talking about copyright-free mp3s, so we do not have to address the copyright controversy right now.

The point I want to make is: the information exchange works in a completely different way to material goods exchange. Obvious as it might seem, this factual reality is little know by most people.

And it is quite understandable that it is so. Most of civilization history has been based mainly on material exchanges and conditions, and in such context we have developed the key ideas of our present culture. We have even treated information as another good to exchange, giving it for a price or a benefit of some sort.

And it worked. It worked marvelously. We created publishing houses, libraries, recording industries, movie theaters. Business flourished and created prosperity. Society was beneficed.

But today material conditions have changed dramatically, and this introduces new possibilities that have to be examined. We have build a world wide infrastructure that allows us to exchange large pieces of information at a very low cost, the Internet. This material infrastructure is what makes possible for John Doe to exchange his mp3 files with hundreds of guys all over the world, and also allows him to pick their files and expand his already huge collection.

It is not only about mp3 files. John Doe can access a free online encyclopedia which is at the very least as good as a regular one, if not better. He can chat with people from anywhere at any time using IRC or any instant messenger software. He can see state of the art videos and documentaries from all over the world accessing google video or YouTube. He has access to the complete Shakespeare works, and can even download the audio version if he does not feel like reading them. He can ask a question about anything at the appropriate online forum and get a most authoritative response by a university professor, working professional, dedicated fan, whatever.

So now we have this huge tool, called the Internet, that has already multiplied our possibilities to inform ourselves. It might seem just a nice commodity, but it is not only that. Not at all.

Now I would like to get back to the example I used on the top of this note. We have seen that our file sharers have not only not loose any of their information, but actually both have had access to new goods. Now lets assume that one of the two people involved is a musician, and that the music he received inspires him in some way, and he uses this inspiration to write a new composition. Now we have a new issue to consider: the information flow between these two guys has not only increased their information goods, but it has helped to create new information, which in turn increases the total amount of goods in the tiny economy of this example. Now, how does this apply to the every day world?

Well, that's the part I like the most. Information creates more information! I mean, what makes it possible to come up with some new piece of information is our ability to re-elaborate and recombine prior pieces of knowledge. You can look at whatever field you want, you will always find that new discoveries and technologies are based on previous knowledge stored by our societies. The breakthroughs are only new and innovative ways to process such information.

Such breakthroughs have happened in societies that had large collections of information at hand, and have been made by people with access to those resources. It is only logical, and certainly even almost mechanical: if you have larger collections of information, then there are more possible recombinations. There are more pieces for a creative mind to play with.

This is not just a naive conclusion. An actual realization of this ideas can be seen in the Free Software community, which believes and practices information sharing and produces because of that cutting-edge software like Linux, Firefox, Openoffice, vlc, apache and many others.

So we seem to be in a win-win situation. The more information we share, the more we get, the more will be created. Everybody wins.

It can be like that, and in certain ways it already is, but there are quite a few issues we have to solve if we want this to happen.

For one thing, there is an important social issue. The internet is the main tool for all this information exchange. People with access to the internet will be empowered by all this knowledge, which will in turn give them actual material gains (software pieces that allow them to produce goods to sell, for instance, and information on how to sell them). If we do not want to increase the social inequalities in our world, we have achieve general internet access for everyone.

For another thing, there is national, military and personal sensitive information which has to be guarded and warranted.

And of course there are many other issues such as the ongoing copyright controversy. We have to keep in mind that the technological explosion we currently live is affecting deeply the material possibilities and conditions of our world, and that the way most of us have learned to think and to handle our lives could be ineffective if based exclusively on the past reality. We have to be flexible, and willing to learn the ways of the new world.