19.1 Michael feldstein - open source, economics, and higher education  (Page 3/8)

Let’s look at a slightly less frivolous example. On Sunday, July 30th, 2006, in response to the news that Blackboard had obtained a patent on certain learning technologies, I created a Wikipedia page entitled History of Virtual Learning Environments . One of the primary motivations was to begin gathering prior art that was relevant to the patent. The text of my entry consisted of exactly one sentence:

This page will chronicle the history of virtual learning environment (VLE) development.

One week later, there were more than 160 edits logged for the page. Almost none of them were mine. In fact, the vast majority of them were by people who each contributed one single entry about projects about which they had personal knowledge. Looking at the page today, it is a highly structured scholarly work with 89 external references and a consistent editorial style, despite the fact that literally hundreds of people have contributed to it. As of this writing, the last edit to it was on October 27, 2007. Yesterday. So it is still under active development by somebody, even though the first author (me) hasn’t touched it in over a year. None of these people were paid to contribute, and there was no formal editorial process or approval structure. And yet, people do continue to invest their time in the document. Some of them may be doing so out of concern over the Blackboard patent (either because they have a direct economic stake in seeing it invalidated or because they have a more idealistic commitment to the principles involved); others may simply be interested in documenting the history of an aspect of their profession and in ensuring that their contribution to it gets recognized. Still others may have no specific interest in the subject matter but may be interested in maintaining the overall editorial quality of Wikipedia. The important point is that, when costs of participation are low enough, any of these motivations may be sufficient to lead to a contribution.

It turns out that this is the key to understanding both Coase and Benkler, both capitalist firms and open source communities.

Friction, intertia, and economics

Despite a reputation for practicing the “dismal science,” Adam Smith and many of his intellectual progeny are fundamentally optimists. You have to be optimistic to believe, as Smith did, that the cumulative effect of individuals pursuing their self-interest in a free market would result in the collective good via the “invisible hand” of the markets. The genius of economist Ronald Coase is that he was able to articulate the force behind this invisible hand—and its limits—in a clear, sensible formula with predictive power. Think of him as the Isaac Newton of economics.

Coase claimed that, in a perfect world, the invisible hand would always prevail. For example, given a farmer and a cattle rancher who both need the same land, the two will always work out a mutually advantageous agreement. One will always offer to compensate the other in return for giving up access to the land such that they both benefit. Importantly, Coase argued that this would be true regardless of who owned the land. In that perfect world, property rights—which many of us have come to understand as a cornerstone of capitalism—are completely superfluous to a properly functioning market. People would trade to mutual benefit without the need for property or companies. Think of this as the economic equivalent of Newton’s First Law of Motion: economic transactions in motion tend to stay in motion.