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Economy of Abundance

Friday, October 27, 2006

A wonderful power point presentation from Anderson's Long Tail, titled "Economy of Abundance" is now available on line. There is a good summary from David Hornik in his blog:
The same businesses that are the poster children for the Long Tail, are the poster children for the Economy of Abundance. And the same businesses that are the victims of the Long Tail are the poster children for the Economy of Scarcity. With bandwidth and storage approaching free, iTunes can offer three million songs (P2P offers nine million). In contrast, with limited shelf space, Tower Records can only offer fifty- or sixty-thousand tracks. The end result, consumer choose abundance over scarcity (something for everyone) -- Tower Records gets liquidated while iTunes grows dramatically. Television is undergoing a similar transformation, from scarcity to abundance. TV initially consisted of only the major networks. Consumers were limited to 3 choices in any given time slot. With cable the number of channels was dramatically increased and a broader range of content became available (Food Channel, Discovery Channel, ESPN, CNN, etc.). To many, 250 channels may constitute sufficient abundance as to approach infinite choice in their minds. But the true television of abundance is YouTube. With unlimited bandwidth and unlimited storage, television is subject to microprogramming -- millions of shows, viewable on demand at any time. Now not only should NBC be worried, so too should be Comcast.
Anderson did not take into account molecular manufacturing in his presentation. I have the feeling that full scale abundancy will-- for the time being-- be only availabe to non-physical goods. The cost for sharing files in P2P is of course, almost zero (there is of course the time costs and therefore opportunity costs being incurred). E-books, songs, videos, you can sell it this way. But that is not the case when you sell vegetables through the internet. There are still costs thay you will have to pay, you need to grow it first, then maybe sell it at e-bay. Consider other commodities such as water. Do you really think there is going to be a long tail for water companies? Nope, water market is always monopolistic.

Those aspects, Anderson did not consider. But, those scarcities may not last long. Thus, there could be a long tail too for water or plants, not the real water or plants, but programs containing molecular structure of water or plants. This is what we call, the nanotech's economy of abundance.

I am taking this opportunity to point out that futurist and nanotech expert had actually come up with the idea of abundance, but seen from the nano perspective and not from the economical and marketing perspective.

Abundant economy will revolutionarize the Law. Creative Commons and EFF movements is a reflection of this, but it is not likely that the developments are limited into those areas. The trend of the future law will follow the long tail trends: decentralized, personalized, fast, consumer-dictated, open, shared, highly networked. In Burgess words:
In a system based on scarcity, those holding the levers of production will not easily give them up. In domestic and international markets based on scarcity, the function and responsibility of directors and officers is to maximize shareholder value—at nearly any cost that does not fall afoul of laws, or at least not so far afoul that the penalties exceed the financial gain resulting from illegal actions.

So, what kind of culture do we want? In a system of plenty, will we continue to keep score by maintaining the preponderance of benefits inside corporate walls and coffers? Will we continue to stifle the spread of benefits through secrecy and protectionism? Unless something changes, history suggests that laws, regulations, and protections will continue to be designed for the exact purpose of directing all profits and virtually all of the benefits to shareholders.
Will corporation remained existed? I have a feeling that the trends toward "limited liability" will be reduced. Limited liability has been quite abusive in that it escapes real liability and hide it behind corporate walls. There is of course a doctrine of lifting the corporate veil, but it doesnt really work if you can hire good lawyers. So I think there is going to be a shift from limited liability to common but differentiated liability. Next question, will multi-national corporations (MNC) ceased to exist? Their number of employees will shrink of course, but it isn't likely that they ceased to exist. They will evolve, maybe as a completely new entity. I must remind you to Google. That, is the prototype of future MNC. And what does google have in mind? Stakeholder, not shareholder. Participation, not centralization. Opennes. Boldness in buying You Tube with the risk for violating multiple copyright laws. The world is changing and the future law must accomodate this.