Here are some thoughts from back in 2006, when Facebook was still the province of early adopters, from Professor John Quiggin. This piece was originally published on Crooked Timber, reproduced here with kind permission from Prof. Quiggin.
He raises some interesting questions about why people participate in the creation of goods by means of social production and the implications of this for business and government. It is still worth thinking about this today, especially in the context of social innovation.
Why do social networks work?
by JOHN QUIGGIN on MAY 30, 2006
Yochai Benkler’s The Wealth of Networks: How Social Production transforms Markets and Freedom is full of interesting things to discuss, but the point that interests me most is the question of why people contribute to social production and what economic and political implications it has, for states as well as for markets and freedom. Benkler previously discussed the same question in Sharing Nicely, and I’ll talk a bit about this as well.
To the extent that there is a conventional wisdom about these things, it’s Eric Raymond’s idea of a gift economy, derived from his participation in the open source software movement. Raymond focuses exclusively on reputation as a motive for contributing to social production, seeking to assimilate all other motives (such as craft values) to reputation. It’s precisely this kind of totalising logic, I’ll argue, that is absent from social production.
On the contrary, there are a wide variety of motives which might lead people to contribute to networked social capital, for example by participating in various aspects of blogging (make posts and comments, linking and blogrolling, improving software, various kinds of metablogging). Possible motives include altruism, self-expression, advocacy of particular political or social views, display of technical expertise, and a desire for social interaction. Particularly in relation to a collective, and largely anonymous, product like Wikipedia, Raymond’s central focus on reputation does not fit the facts.
As against these various motives, there are the two standard methods that have been relied on to deliver most information production and innovation for the past 150 years: markets and bureaucracies.
Benkler discusses markets, and the associated profit motives, at some length, making the point that narrowly economic motives tend to crowd out alternative forms of motivation. He mentions the classic work of Titmuss on blood donations and some other examples to show that monetary and social-psychological motives are likely to conflict, rather than reinforcing each other. By contrast, different social-psychological motives are usually complementary or at least mutually consistent.
Why is this? At a superficial level, it’s obvious that people act differently, and are expected to act differently, in the context of relationships mediated by money than in other contexts. Behavior that would be regarded favorably in a non-monetary context is regarded as foolish or even reprehensible in a monetary context.
One of the most important general differences relates to rationality and reciprocity. In a non-market context, careful calculation of costs and benefits and an insistence on exact reciprocity is generally deprecated. By contrast, in market contexts, the first rule is never to give more than you get.
This rule applies in market contexts but not in social contexts, where such careful calculation is, as Benkler notes, generally deprecated, because markets create opportunities for systematic arbitrage that do not apply in other contexts. In an environment where exchanges are not carefully calculated, a trader who consistently gives slightly short weight can amass substantial profits. If trading partners assume honourable behavior, none will suffer enough to notice, but eventually arbitragers will drive out their less calculating trading partners.
Similar points can be made about other motives. There are a whole range of sales tricks designed to exploit altruism, friendship, desire for self-expression and so on. Hence, to prosper, or even survive, in a market context, it is necessary to adopt a view that ‘business is business’, and to (consciously or otherwise) play a role as a participant in the market economy that is quite distinct from what might be conceived as one’s ‘real self’. This is a prime example of what Goffman calls an obligatory role.
The crucial feature of economic motives in a money economy is not that they are less noble or desirable than alternatives such as desire for fame, but that a money economy provides a total system of rationality, from which most of the motives associated with social production are excluded.
Markets are not the only total system of rationality that operate in a modern society. bureaucracy and the state have a logic of their own. For most of the 20th century, the central issue of politics and economics was the question of where the boundary between markets and bureaucracies (public and private) should be drawn.
Benkler largely ignores the state. As he says (p. 16) ‘In much of [my discussion], 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’. But this position overlooks the critical fact that both the Internet and the World Wide Web were developed primarily by state agencies or state-funded institutions (DARPA, NSF, the university sector, CERN, NCSA and so on). Yet this outcome was not the product of rational bureaucratic planning. Rather, like Topsy, the Net and the Web ‘just growed’.
Like market rationality, bureaucratic rationality implies a complete specification of behavior When dealing with a representative of a bureaucracy, we (mostly) expect consistent application of rules, rather than an adherence to standard social norms such as ‘look after your family/mates before others”. Similarly, and more crucially, bureaucracies are supposed to allocate their resources to the achievement of specified goals, not to do things because they would be fun, or even socially beneficial. All of this seems to leave little room for social production. So how did the state come to give us the Internet? More significantly for our present purposes, what kinds of public policy will facilitate the further growth of social production and the wider distribution of its benefits?
I don’t have a complete answer to either question. However, some obvious implications run counter to current developments in policy.
First, if monetary returns are weakly, or even negatively correlated with the value of social production, there’s no reason to expect capital markets to do a good job in allocating resources to supporting innovation. It follows that the policy orientation of the past thirty years, in which increasing reliance has been placed on capital markets, is going in the wrong direction. The examples considered by Benkler are illustrative. Both blogs and wikis have their roots in the late 1990s, a time when capital markets were splashing hundreds of billions of dollars around on Internet-related projects. Most of these projects came to nothing, while blogs and wikis developed with little or no venture capital money to help them along.
A second implication is that the policies of New Public Management, which attempt to tighten bureaucratic accountability and focus on competitive disciplines and measurable outcomes may be misguided. Rather than seeking to drive people harder in the search for increased productivity, government macro-economic policy should be oriented towards making room for creativity and facilitating its expression. Similarly, while competition has its place, public policy should be at least as much concerned with promoting co-operation. The assumptions we have had about the competitive nature of innovation are, therefore, undersupported in the new environment in which we find ourselves. If governments want to encourage the maximum amount of innovation in social production then they need to de-emphasize competition and emphasize creativity and cooperation.
Source: Crooked Timber 2006, reproduced here with kind permission from Prof. John Quiggin
