Adam Smith 2.0: Emergent Public Goods, Intellectual Property and the Rhetoric of Remix

I put quite a bit of effort into my two pieces on Adam Smith in Ross Gittins’ column while he was on leave and got quite a lot of positive feedback about them.  So when I was asked to talk to an excellent conference organised by the indefatigable Fitzgerald siblings of QUT – Professors Brian and Anne – entitled Copyright Future: Copyright Freedom about the law of copyright in the age of the internet I decided to try to turn those columns, particularly the latter one, into a more substantial paper.  Some academic stars were in attendance from around the world including Lawrence Lessig and it was a great conference.  Plaudits to the Fitzgeralds and others associated with it. One thing I really liked was the terrific way in which PhD students were involved, giving five minute talks on their research, being involved as discussants. They’re doing interesting things, and we were interested to hear what they were.  Still, I christened Brian “Brother Didactica” because boy did we have a meal to chew through – full on papers, comments, discussants, questions, slide shows, from 8.30 am till 6.30 at night.  Seventeen people wheeled on and off the stage efficiently before lunch!  And on it went.

I was one of the very few economists there, and was alarmed at how much of a meal lawyers can make of things that economists see as non-issues (like how to get the last penny of royalties to the copyright holders of ‘orphan works’ – that is works that are not ‘public domain’ but for which rightful owners of copyright can’t be found.)  I was sitting in a lengthy session about this and other not dissimilar problems in amazement that no-one reached for an economic perspective on this stuff (even if they didn’t want to treat it as the final word).  I hope to blog about this. I wanted to say that there should have been more economists at the conference – which there should have been.  But I didn’t want to say that if only economists were in attendance it would all be sorted.  So if I get round to the post I have in mind I’ll spell out a little more about what I mean and explain where I think economists’ reasoning is strongest (something I’ve already foreshadowed above) and where I think economists don’t think particularly well, and where lawyers do a better job.

In the meantime, I thought I’d post my talk which is the ‘paper’ of the ‘column‘ as it were, which I was pleased to find Mark Thoma thought worthy of his fantastic site Economists’ view. Likewise Gavin Kennedy liked my earlier column about Adam Smith and mirror neurons. Gavin and Mark Thoma have also picked up Don Arthur’s post on Adam Smith on poverty.  Anyway, the paper of the columns is over the fold.  Here is the paper in pdf format and here are the slides to which it refers. 

Adam Smith 2.0: Emergent Public Goods, Intellectual Property and the Rhetoric of Remix

Nicholas Gruen

A paper for the Copyright Future: Copyright Freedom Conference

Canberra 27^th May, 2009

I.

¹

In a landmark article proposing a politics of intellectual property, James Boyle mentions two contrasting principles of intellectual property (IP). With IP being a public good, property rights can help bring IP into existence by reducing free riding on others efforts. Yet Boyle points to another legal tradition (1997, p. 97). Privatising knowledge restricts free speech. As Boyle points out

Courts are traditionally much less sensitive to First Amendment, free speech and other “free flow of information arguments” when the context is viewed as private rather than public, or property rather than censorship. Thus, for example, the Supreme Court will refuse to allow the state to ban flag burning, but it is quite happy to create a property right in a general word such as “Olympic,” and allow the word to be appropriated by a private party which then selectively refuses public use of the word. Backed by this state-sponsored “homestead law for the English language,” the United States Olympic Committee (USOC) has decreed that the handicapped may have their “Special Olympics,” but that gay activists may not hold a “Gay Olympics.” The Court saw the USOC’s decision not as state censorship, but as a mere exercise of its private property rights. (Emboldened, Chief Justice Rehnquist applied the same argument to the American flag.)

Boyle proposes a new politics of IP. Admiring the way in which environmentalism imputed to environmental causes far greater ethical urgency than is conveyed in a cost benefit analysis, he seeks a similar politics of IP, one which engages us more deeply than mere accounting or economics.

In this paper I suggest that paradoxically enough, economics can offer some help in this quest, or at least economics as its founder hoped it might become. Like Darwin, Adam Smith was a plodder and a perfectionist, pondering things for many years, seeking ways to minimise any offence they might cause, before setting out his views in print. Smith’s first major book was The Theory of Moral Sentiments published exactly 250 years ago. It contained Smith’s most fundamental thoughts about human beings and the society which they create and which of course creates them.

In this paper I argue that way back at the beginning of economics, Smith pioneered an approach to the creation of public goods which has gone largely ignored. This is very relevant to the philosophy of IP. Even more, Smith saw human development whether it was cultural or economic as at bottom an expression of human sociality. And as Web 2.0 burgeons before us Smith’s thinking helps us see it in its most promising, its most glorious light: As a scaling up of human sociality itself.

II.²

Against a backdrop in which certain Christian teachings had demonised self-interest, Smith sought to revive aspects of ancient traditions in which the pursuit of true, enlightened self-interest is bound up with the quest for virtue.

³Along with other Enlightenment figures, Smith was in awe of the power and economy of Newtons system of celestial mechanics involving as it did an immense chain of the most important and sublime truths . . . connected together by one capital fact, of the reality of which we have daily experience. Emulating Newton, Smith’s economics was built from a single principle, in this case, human beings tendency to truck barter and exchange. And his meta theory of society in The Theory of Moral Sentiments was built upon the single principle of sympathy. Today the word ‘sympathy’ typically denotes some sentimental well wishing towards another. Smith’s use of the word sometimes suggests this, but more fundamentally Smith argues that sympathy is our engine of social epistemology. As the second paragraph of The Theory of Moral Sentiments explains:

Having no immediate experience of what other men feel, we can form no idea of the manner in which they are affected, but by conceiving what we ourselves should feel in the like situation. Though our brother is upon the rack, as long as we ourselves are at our ease, our senses will never inform us of what he suffers. They never did, and never can, carry us beyond our own person, and it is by the imagination only that we can form any conception of what are his sensations.

Imaginative sympathy gives us the tools to understand what others are thinking. Just as Shakespeare observed that all the world was a stage, Smith introduced a similar idea to social science (or moral philosophy, as he called it). Reflecting on our own observation of others, we realise that others observe us and form opinions about us just as we do about them. And from the cradle to the grave, we are hard wired to care deeply what others think of us.

So much for homo economicus the pure, calculating egoist optimising his profit or utility without regard for others views or conduct (except where they’re useful to his ends). A newborn baby is a kind of inchoate homo economicus, a blob of infantile egoism infans economicus if you like. But beyond this, the process that we now call socialisation progressively deepens and transforms us.

As Smith makes clear, socialisation begins from infancy. Indeed, even if it were possible that a human creature could grow up to manhood in some solitary place there is no exposure to society without socialisation.

He could no more think of his own character . . . than of the beauty or deformity of his own face. . . . Bring him into society, and he is immediately provided with the mirror which he wanted before. . . . all his own passions will immediately become the causes of new passions. He will observe that mankind approve of some of them, and are disgusted by others. He will be elevated in the one case, and cast down in the other his desires and aversions, his joys and sorrows, will now often become the causes of new desires and new aversions, new joys and new sorrows: they will now, therefore, interest him deeply, and often call upon his most attentive consideration.

⁴ Our craving of approval, our dread of disapproval and our ability to understand others by imagining ourselves in their shoes draws us into a life long dialectical social drama in which were all actors and spectators, not just of others actions, but ultimately of our own. We keep an eye on our own conduct contemplating what others might think of us. As we mature (and Smith knew that some mature more than others!) this internal questioning takes on its own moral force. We ultimately crave the love and approbation of those we most respect. And conscience emerges for Smith as a fictive impartial spectator which becomes the yardstick of our actions, and leads us towards virtue. For Smith, the whole of human society, its psychology, its sociology, its economics, its social customs and mores and perhaps even its religion, is built on these simple foundations.

Note the rhetorical nature of this theory for we can misunderstand its emphases if we ignore its pervasive normative tone. Smith’s first lectureship was in rhetoric and his scientific contributions are subsumed within the contemporary eighteenth century rhetorical tradition encompassing the threefold task of delighting, instructing and persuading the reader to identify with virtue. The Theory of Moral Sentiments theory of virtue is itself delivered in a rhetorical package which engages in that quintessentially rhetorical practice of praising virtue and blaming vice. In addition to occasional comments on contemporary policy, it is itself a persuasive invitation to virtue.

It’s not appreciated how much even The Wealth of Nations, likewise conforms to this rhetorical tradition. To recap let’s note the rhetorical resonances in what might be the most passionate passage in all of Smith’s writing. It is about the African slave trade.

Every savage undergoes a sort of Spartan discipline, and by the necessity of his situation is inured to every sort of hardship. . . Fortune never exerted more cruelly her empire over mankind, than when she subjected those nations of heroes to the refuse of the jails of Europe, to wretches who possess the virtues neither of the countries which they come from, nor of those which they go to, and whose levity, brutality, and baseness, so justly expose them to the contempt of the vanquished.

III.

⁵ Although Smith can be rightly seen as an apostle of self-interest, one might also portray his contribution as delineating those public goods which are preconditions for self-interest to be socially constructive. Here in a famous passage, Smith explains how the self-seeking individual in a market turns the exchange of private goods towards the common good.

He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. . . . . ⁶ intends only his own security; and by directing ⁷ industry ⁸ in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it.

⁹ So far Smith has illustrated nothing more than the optimisation of the production and exchange of private goods, not the emergence of a public good. Though it was not clearly defined in Smith’s time, in modern economics public goods are characterised by non-rivalry and non-excludability. A wireless broadcast is non-rival because, unlike toasters or cars or fridges, if one house enjoys the broadcast it does nothing to prevent others from enjoying it. At least unencrypted, the broadcast is also non-excludable. Anyone can tune in. If someone must fund the broadcast, we may have a problem, because the potential for free riding undermines the ability to charge for the broadcast as we do for fridges and toasters.

But look a little closer and there are public goods that are both the precondition and consequence of the invisible hand of the market. The precedent as Smith explains at length and with great force in The Theory of Moral Sentiments is a peaceful law abiding citizenry and the rule of law or what Smith called commutative justice respect for property.

Looking around we see other public goods in Smith. The emergence of currency is an emergent property of markets as they evolve, although, as in the case of public mores, the state may lend its authority to reinforce community norms. And the thing which most fundamentally distinguishes us from the animals is an emergent public good. Adam Smith wrote a treatise on the emergence of language in which he spelled out precisely this quality of language as an emergent product of individuals seeking only their own private ends. A rule of grammar would establish itself insensibly, and by slow degrees as a consequence of the human love of analogy and similarity of sound as people would endeavour to make their mutual wants intelligible to each other.

Thus as Otteson has spelled out, Smith’s market model in which public goods are the emergent and unintended product of private endeavors to meet private needs, applies not just to the way markets serve the common good and produce public goods, but also to the way language, currency and social mores emerge, all of which are foundations of a market order. We might summarise by saying that the public goods of language and widely shared social mores and a currency are the preconditions for the emergence of a sophisticated market order which itself is the precondition for the emergence of the public good of market prices and liquidity.

IV.

¹⁰And here’s the thing. Since Smith, economics has always taken the central problem of public goods to be the difficulty of funding them, given the presence of free riders. But by virtue of their very nature as emergent properties of self-seeking humans within society no-one has had to pass round the hat to bring emergent public goods into existence. They’re no more or less than the accretions of life itself!

Smith’s Newtonian schema allows Smith to explain how social mores which underpin the ascent to increasing opulence in the economy and virtue amongst the people all emerge from a single source – human sympathy between free people. Neither the crown nor its government intrudes in any way, although at some stage in the tradition of British Common Law (Smith also lectured in Jurisprudence) the state may publicly legitimate and re-enforce what are already private conceptions of justice.

¹¹And now Web 2.0 brings us a panoply of new emergent public goods: the epiphenomena of those seeking private benefits for themselves. Though it predates the coining of the expression Web 2.0 open source software is paradigmatic. Although sometimes driven by loftier motives, the motive for a great deal of open source software coding is the private interest of a user in solving their own problems by fixing bugs or adding features. Once coded the producer has an interest in having their code incorporated into the project and so donates it. One can tell similar stories about the other Public Goods 2.0 like blogging, Flickr and Wikipedia though of course there are richer motives in play as well. It is to those we now turn.

V.

¹²Smith’s intensely, inextricably social picture of the way we are constituted finds its way into his economics. Despite his desire to construct his economics around the single principle of our innate tendency to truck barter and exchange in lectures delivered before The Wealth of Nations, Smith permitted himself the thought that there was something even more fundamental human sociality and (note Smith the rhetorician!) the desire to persuade. Here is Smith’s oratorical theory of a bargain.

If we should enquire into the principle in the human mind on which this disposition of trucking is founded, it is clearly the natural inclination every one has to persuade. The offering of a shilling, which to us appears to have so plain and simple a meaning, is in reality offering an argument to persuade one to do so and so as it is for his interest.

Of all economists, Smith would have understood the foundational proposition of what might be taken as an early Web 2.0 credo, the cluetrain manifesto Markets are conversations. And although no doubt Smith would have been amazed at some of the more amazing things about Web 2.0 like Wikipedia for instance he might have been one of the least amazed. For so much of the engine behind Web 2.0 is the same as the engine Smith saw behind society the dialectic of human sociality.

¹³In this regard note Odlyzkos (2001) documentation of the how much larger a share of the economy is driven by our desire for interaction between two specific parties, compared with broadcasting or publishing from one source to many. Speaking of the U.S. economy Odlyzko observes

What is striking is how highly valued ¹⁴ communications is.  . . . Our postal system alone collects almost as much money as our entire movie industry, even though the latter benefits from large foreign sales. For all the publicity it attracts, entertainment is simply not all that large, because people are not willing to pay very much for it. . . . Communications is huge, and represents the collective decisions of millions of people about what they want. It is also growing relative to the rest of the economy in a process that goes back centuries. As a fraction of the U.S. economy, it has grown more than 15-fold over the last 150 years. The key point . . . is that most of this spending is on connectivity, the standard point-to-point communications, and not for broadcast media that distribute content.

¹⁵Odlyzko documents how pundits and market players have repeatedly overestimated our preparedness to pay for content, while underestimating our desire for inter-connectedness, from the underestimation of the value of Bells telephone for social communication to the ARPANETs engineers surprise at the popularity of e-mail to the under-appreciation of the value of mobile phones and scepticism that SMSs were anything more than a toy gimmick.

Smith doesn’t write about the power of propaganda or anything much emitted from a single source, however powerful. He writes about human beings creating their own world through their communication, their interest in what each other are thinking in his terminology their sympathy and their interaction. And he writes about the strength of their social desires, from the desire to communicate to their desire to fit in and be well regarded by each other. Those forces are now the dominant force behind the burgeoning of social networks and many other phenomena of Web 2.0 right now.

VI.

¹⁶Smith also gives us a more compelling portrait of the psychology of motivation and achievement. For homo economicus the attraction of power, fame or wealth is simple greed for more. Smith is a better psychologist. To what purpose is all the toil and bustle of this world? Smith asks about the human drive towards avarice and ambition? Smith concludes it is the vanity, not the ease, or the pleasure, which interests us.

Is it to supply the necessities of nature? The wages of the meanest labourer can supply them. . . . To be observed, to be attended to, to be taken notice of with sympathy, complacency, and approbation, are all the advantages which we can propose to derive from it.

This rings true for me, and perhaps more importantly for Warren Buffett recently quoted in uncannily Smithian terms (Lewis, 2009):

Basically, when you get to my age you’ll really measure your success in life by how many of the people you want to have love you actually do love you. I know people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them.

¹⁷This striving for fame, glory, the respect of peers is an important, though not necessarily primary motive behind much coding of open source software and it surely lies behind a great deal of the voluntary work that is done on blogs, and any number of other Web 2.0 phenomena. Smith comments at some length on the intensity of our desire to discover something of ourselves in others, and our desire to reciprocate both the favours we are done, and the slights.

What most of all charms us in our benefactor, is the concord between his sentiments and our own, with regard to what interests us so nearly as the worth of our own character, and the esteem that is due to us. We are delighted to find a person who values us as we value ourselves, and distinguishes us from the rest of mankind, with an attention not unlike that with which we distinguish ourselves. To maintain in him these agreeable and flattering sentiments, is one of the chief ends proposed by the returns we are disposed to make to him.

And Smith understood that there are all sorts of quirky, all-too-human motivations arising from our social instincts. They’re powering Web 2.0 also. As Nicholson Baker wrote recently (2008) the initial sources such as the 1911 Encyclopedia Britannica and other public domain publications, which provided a seed for many entries and altruism don’t fully explain Wikipedia’s success

The real reason it grew so fast was noticed by co-founder Jimmy “Jimbo” Wales in its first year of life. “The main thing about Wikipedia is that it is fun and addictive,” Wales wrote. Addictive, yes. All big Internet successes e-mail, chat, Facebook, Gawker, Second Life, YouTube, Daily Kos, World of Warcraft have a more or less addictive component they hook you because they are solitary ways to be social: you keep checking in, peeking in, as you would to some noisy party going on downstairs in a house while you’re trying to sleep.

In a treatise on the history of astronomy remarkably prescient of Thomas Kuhns Structure of Scientific Revolutions, Smith explained the motivation behind scientific progress as driven by the mental discomfort of things not quite adding up. The mind seeks to relieve the chaos of jarring and discordant appearances, to allay this tumult of the imagination, and to restore it, when it surveys the great revolutions of the universe, to that tone of tranquility and composure, which is both most agreeable in itself, and most suitable to its nature. And indeed its the stub, the niggling error, outrageous claim, the irritating infelicity that keeps some up at night. ¹⁸

VII.

¹⁹ So where does this leave us in considering copyright in the world of Web 2.0 and remix? In fact Smith accepted copyright, at least for the fourteen years protection it spanned in his day, as an encouragement to the labours of learned men.

And this is perhaps as well adapted to the real value of the work as any other, for if the book be a valuable one the demand for it in that time will probably be a considerable addition to his fortune. But if it is of no value the advantage he can reap from it will be very small.These two privileges therefore, as they can do no harm and may do some good, are not to be altogether condemned. But there are few so harmless.

Given Smiths scepticism about publicly sanctioned monopolies, one can’t imagine him looking on the IP expansionism of our own time with either pleasure or surprise. My guess is that Smith would have continued to approve of copyright where it underpins production that would not otherwise take place but not beyond that point.

My one practical suggestion combines my admiration for Smith and one of my own country’s policy successes. We reined in the monster of protectionism that Smith warned against by insisting that any change to protection be preceded by an independent study analysing its net economic effects. Given the way in which IP protection has been ramped up in circumstances that make it highly dubious that it will lead to more production I have for some time argued that we should agitate to enshrine the principle in international negotiations that no increase in IP be negotiated ahead of an independent study demonstrating its net global economic benefits. Further, the more I see of the politics of IP, the more I see international agreements operating simply as constraints on what national governments can do. They can indeed be constraints, and to some extent that is their point. But it’s remarkable how often it seems to be forgotten that we negotiate international agreements. Given this, every time I hear someone tell me that sensible reform isn’t possible under this or that international agreement, whether it be multilateral like TRIPS or bilateral like the Australia U.S. Free Trade Agreement, Id like to hear them add words to the effect that we should bring up the problem at the very next international meeting where these agreements are discussed.

But I began this paper suggesting that Smith might help us meet James Boyles’ challenge of going beyond contemporary economic concerns in conceptualising the issues at stake in intellectual property. To recap, Boyle wants something broader, more human than the simple totting up of costs and benefits typical of contemporary economics. Remarkably enough, Smith offers several promising leads.

• He shows us something that is usually impossible to find in most economics textbooks. There is a substantial class of pure public goods which are emergent. Thrown off spontaneously by social and intellectual interaction they require no funding or outside intervention.
• Web 2.0 is now scaling up this miracle, generating a kaleidoscopic array of new global public goods funded from nothing more than the restless sociality of our species not least our desire for the esteem of our fellows. As Smith put it, our striving for wealth, or fame or glory isn’t for the thing itself but for what it brought an easy empire over the affections of mankind. For the most part, collaborative web can be funded without any monopoly in the content produced.

If this underscores the economic reason for avoiding excessive IP protection, it also hints at that human aspect that James Boyle is after. For as we extend IP we are discovering areas in which our human instincts recoil. It may or may not entail more economic benefits than costs to allow the patenting of human genes, though somehow I doubt it. But it had better be economically worthwhile, because economic considerations aside, it seems kind of creepy. If I ask whether should I be free to use Tim O’Reilly’s term Web 2.0 as I like and as I have, without payment and indeed, until now even without acknowledgment, economics says ‘Yes’. That’s because the only case for providing monopolistic protection is to bring forth IP. And yet we have the expression delivered to the world, safe and sound without it. But there’s another, more human answer. Commonsense, if I might be permitted to invoke such an abused term, says ‘Yes’ too. Us humans like communicating and interacting amongst each other. Our communication today is built on our own and others past communications. And it’s easy to see harm coming from outside interference in that process and from commercialising it. At least as applied to the intimacies of daily life, its kind of creepy.

²⁰

Smith surely reinforces that commonsense. Certainly for his time, but even today, a remarkable characteristic of Smith is his faith in human cultures capacity to build itself in a healthy way from the ground up, from the smallest interactions between the most ordinary people and his concomitant scepticism of what could be gained from any heavy handed interventions in that process.

In this regard we should heed the lesson from the last thing Smith ever wrote for publication. The revolutionaries of France and America had warmed to Smith’s confidence that people could be the authors of their own culture, and his faith in the way the small details of human life and human culture, when left to their own devices within the rule of law ultimately build better lives. But like his friend Edmund Burke, Smith looked on the events of 1789 in France with great anxiety. As a result, the next year the year of his death, he added a section to the final edition of his Theory of Moral Sentiments which thus became both the first and last book he published.

Anxious like Burke about the way in which those in power could overreach themselves he penned a section against the man of system.

The man of system. . . is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. . . . He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard. He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great chessboard of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

Finally, I can’t finish without observing that Smith might have wanted to add one more thing. Amid the unruly mix of motives that have always powered the emergent phenomena of social life, and now power the emergent public goods of Web 2.0, we catch glimpses of our better selves. And we come to see ourselves as others see us and encounter others doing the same. Something tells the blogger, the Wikipedian, the coder of the next distribution of WordPress or Linux, that their quest that easy empire over the affections of mankind is just a foretaste of our destiny, which can only be found on our halting journey towards that more distant and difficult ultimate destination virtue itself.

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