On commercial and “second” economies and the Because Effect

This post was sparked by something I read in Larry Lessig’s blog a week or so ago, on the economies of culture. In it, Larry discusses the challenges and issues involved in linking the “commercial” economy with the “sharing” economy, or what he terms the “second” economy. It’s worth a read; if you get the time, take a look at the comment stream as well.

Enterprise IT departments face this challenge of connecting two polarised extremes on a regular basis, whatever the terms du jour; be it open versus closed, proprietary versus opensource, hierarchical versus networked or even waterfall versus agile. Some months ago, Kathy Sierra had a great post on the difference between start-up and corporate mindsets, covering much the same thing, but from a different perspective.
When you speak to the extremists, the standard response is You Are Wrong I am Right, which gets us precisely nowhere. Which is why people resonated with what Tara had to say in Missing The Point a few months ago, where she spoke of the need to get the pendulum swinging right.

Debate can be polarised, but reality sticks firmly in the middle. And we need to learn how to live with that reality and create value from it.

I still think that it will all boil down to the Because Effect. Commercial economies are all about making money With. Gift or shared economies are all about making money Because Of. And the philosophical differences between the two will probably not converge. They are two different states in time. Enterprises will often have bits in both states. FLOSS is primarily about infrastructure, even if what we call infrastructure is crawling up the stack. FLOSS infrastructures will continue to live with proprietary applications further up the stack.
As exemplified in the Because Effect and Stewart Brand’s earlier writing, the real polarisation seems to be about something else. Scarcity versus abundance. People know how to make money out of scarcity, but are less comfortable with doing so with abundance. The problems we face with bad IPR and bad DRM and “unfair” vendor behaviours all seem to be connected with creating scarcity out of abundance.

6 thoughts on “On commercial and “second” economies and the Because Effect”

  1. Money as a store of value or money as a medium of exchange? And in what economic and fiscal conditions, constraints and strategic choices?

    I don’t think of money as defined by scarcity, so I need to understand more. My bad.

  2. I am no expert in money but I think that it is scarcity that makes things that were precursors of money valuable (gold, sea shells, textile chunks, etc). After all if there is abundance of something why should I accept it as a payment for something when I can have it for free?

  3. It’s like paying for water. It may exist in abundance in many places, but not everywhere. Abundance does not necessarily mean ubiquity.

    You then have a number of acquisition costs…. transportation, packaging, quality control, things that make it easier for you to consume that which is abundant. So you can still impute value to it.

    But what happens with abundant things is that they can primarily be used as media for exchange, rather than stores of value. And they become media for exchange because the abundant things have had some value impressed upon them, some value added, that differentiates the abundant free thing from the abundant “priced” thing.

    These are just thoughts, I learn from your questions. Thanks

Let me know what you think

This site uses Akismet to reduce spam. Learn how your comment data is processed.