2: New Media Economics Flashcards
Who is Yochai Benkler?
Born in 1964, Benkler was educated as a lawyer. He was the Berkman Professor of Entrepreneurial Legal Studies at Harvard Law School, and Internet & Society at Harvard University.
He wrote the Wealth of Nations in 2006
Why do we rely on commercial markets for cars, steel and wheat but not for knowledge?
Due to the economic nature of knowledge as a non-rivalrous good. Non-rivalrous goods are those which are not used up when one person consumes them
Non-rivalrous goods are most efficiently produced as public goods because much help is needed to create markets around them.
- Copyright and patents are key supports for information markets
- Both introduce extra costs to those buying the information
- But both are justified because in the long term nobody would produce information without monetary recompense
What is Benkler’s argument to the mainstream answer of knowledge being a non-rivalrous good?
1) the assumption that people will only produce information if they are monetarily compensated is false
2) copyright and patents impose a significant brake on innovation, by raising the cost of information inputs to new ventures beyond the minimum required to produce that information
3) that there are other models of information production that do not rely on imposing these extra costs (ie. newspapers)
What is Benler’s most important observation?
The “marriage” of information & cultural production to computer networks.
Elaborate on the marriage of information and cultural production to computer networks.
The plummeting cost of computer networking technology has changed the landscape of information and cultural production qualitativel.
- It allows liberation from the constraints of physical capital, leaving creative human beings freer to engage in a wide range of information and cultural production practices.
For Benkler the possibilities are truly revolutionary
1 billion people have b/w 2 to 6 billion spare hours each day, the equivalent of 340,000 people working fulltime with no vacations for 3 to 8.5 years
How does digital markets allow for qualitative change?
Other than opening up quantitatively huge amounts of non-market labour, digital networks allow for qualitative change:
“a new modality of organizing production. It is radically decentralized, collaborative, and non-proprietary; and based on sharing resources and outputs among widely distributed, loosely connected individuals who cooperate with each other without relying on either market signals or managerial commands”
In other words, commons based peer production can replace market driven, commercial forms of information and cultural production
What is commons based peer production?
Commons:
A means to structure access to resources
Under a commons decisions about a resource are made by a community
Opposite of the idea of property where decisions are made by an owner
Peer production:
A means to structure production
Under this system, production depends on self-selected individual actions in a decentralized network
Contrasts with traditional factory production systems that are centralized, hierarchical and enforced
Examples of commons based peer production
Some examples of commons based peer production Open software (Sourceforge) Project Gutenberg SETI@home NASA clickworkers Wikipedia
Who is Manuel Castells?
Born in 1942, Castells is the Professor of Sociology and Professor of City and Regional Planning at the University of California, Berkeley. He was exiled from Franco’s Spain in the 1960s, and studied law and economics at the Sorbonne. He attained PhD in Sociology from University of Paris
He wrote the The Information Age: Economy, Society and Culture.
Under the rise of the network society, what are the characteristics of the new economy?
Characteristics of the new economy:
- Informational in that productivity and competitiveness are based on generation of new knowledge
- Global in that production, consumption and circulation is on a global scale
- Networked in that productivity is generated and competition conducted through flexible and shifting business networks
All of these characteristics are enabled by new forms of information technology AND political work
Differentiate the global economy and the world economy.
The world economy has existed since the 16th century
The global economy is a recent creation
It refers to an “economy with the capacity to work as a unit in real time, or chosen time, on a planetary scale”
By planetary, Castells means that this new economy stretches around the globe, but not all parts of the globe are part of it nor are all economic activites, only core activities
Name all the core activities
Finanical market
International trade of goods and services
Internationalisation of production
Elaborate on the the core activity for financial markets
Example of a core activity: financial markets
Enabled by new information technologies
Enabled equally by government deregulation in the 1980s
Manifests itself in:
Increased use of financial instruments such as derivatives
Hedge fund speculation
General trend is for capital flows to become global and autonomous from actual economies
Elaborate on the core activity for international trade in goods and services
Example of a core activity: international trade in goods and services
Not as large as finance, but still important
Enabled by IT and deregulation (free trade agreements, WTO negotiations)
Manufactured goods rather than commodities are dominant
Most trade is between developed countries
What is new is the addition of a second tier of countries (China, South Korea, Taiwan) specializing in certain kinds of goods
Globally, greater inequalities between regions on the basis of high and low technology goods and services (Africa stills lags behind)
Elaborate on the core activity for internationalisation of production
Example of a core activity: the internationalization of production
Increased flows of FDI, but mostly between or to developed countries
Increased role of MNCs
Development of subcontracting firms in Hong Kong, Italy, Taiwan
New production system involves the assembly of components sources from a wide number of firms from around the world: high volume, flexible, and customized
Relies on strategic alliances and cooperative projects between units of large corporations and networks of small and medium enterprises
Requires very flexible management enabled by IT and once again, government deregulation
