April 17, 2014

avatar

The Trouble with "Free Riding"

This week, one of my favorite podcasts, EconTalk, features one of my favorite Internet visionaries, Clay Shirky. I interviewed Shirky when his book came out back in April. The host, Russ Roberts, covered some of the same ground, but also explored some different topics, so it was an enjoyable listen.

I was struck by something Prof. Roberts said about 50 minutes into the podcast:

One of the things that fascinates me about [Wikipedia] is that I think if you’d asked an economist in 1950, 1960, 1970, 1980, 1990, even 2000: “could Wikipedia work,” most of them would say no. They’d say “well it can’t work, you see, because you get so little glory from this. There’s no profit. Everyone’s gonna free ride. They’d love to read Wikipedia if it existed, but no one’s going to create it because there’s a free-riding problem.” And those folks were wrong. They misunderstood the pure pleasure that overcomes some of that free-rider problem.

He’s right, but I would make a stronger point: the very notion of a “free-rider problem” is nonsensical when we’re talking about a project like Wikipedia. When Roberts says that Wikipedia solves “some of” the free-rider problem, he seems to be conceding that there’s some kind of “free rider problem” that needs to be overcome. I think even that is conceding too much. In fact, talking about “free riding” as a problem the Wikipedia community needs to solve doesn’t make any sense. The overwhelming majority of Wikipedia users “free ride,” and far from being a drag on Wikipedia’s growth, this large audience acts as a powerful motivator for continued contribution to the site. People like to contribute to an encyclopedia with a large readership; indeed, the enormous number of “free-riders”—a.k.a. users—is one of the most appealing things about being a Wikipedia editor.

This is more than a semantic point. Unfortunately, the “free riding” frame is one of the most common ways people discuss the economics of online content creation, and I think it has been an obstacle to clear thinking.

The idea of “free riding” is based on a couple of key 20th-century assumptions that just don’t apply to the online world. The first assumption is that the production of content is a net cost that must either be borne by the producer or compensated by consumers. This is obviously true for some categories of content—no one has yet figured out how to peer-produce Hollywood-quality motion pictures, for example—but it’s far from universal. Moreover, the real world abounds in counterexamples. No one loses sleep over the fact that people “free ride” off of watching company softball games, community orchestras, or amateur poetry readings. To the contrary, it’s understood that the vast majority of musicians, poets, and athletes find these activities intrinsically enjoyable, and they’re grateful to have an audience “free ride” off of their effort.

The same principle applies to Wikipedia. Participating in Wikipedia is a net positive experience for both readers and editors. We don’t need to “solve” the free rider problem because there are more than enough people out there for whom the act of contributing is its own reward.

The second problem with the “free riding” frame is that it fails to appreciate that the sheer scale of the Internet changes the nature of collective action problems. With a traditional meatspace institution like a church, business or intramural sports league, it’s essential that most participants “give back” in order for the collective effort to succeed. The concept of “free riding” emphasizes the fact that traditional offline institutions expect and require reciprocation from the majority of their members for their continued existence. A church in which only, say, one percent of members contributed financially wouldn’t last long. Neither would an airline in which only one percent of the customers paid for their tickets.

On Wikipedia—and a lot of other online content-creation efforts—the ratio of contributors to users just doesn’t matter. Because the marginal cost of copying and distributing content is very close to zero, institutions can get along just fine with arbitrarily high “free riding” rates. All that matters is whether the absolute number of contributors is adequate. And because some fraction of new users will always become contributors, an influx of additional “free riders” is almost always a good thing.

Talking about peer production as solving a “free-rider problem,” then, gets things completely backwards. The biggest danger collaborative online projects face is not “free riding” but obscurity. A tiny free software project in which every user contributes code is in a much worse position than a massively popular software project like Firefox in which 99.9 percent of users “free ride.” Obviously, every project would like to have more of its users become contributors. But the far more important objective for an online collaborative effort to is grow the total size of the user community. New “free riders” are better than nothing.

I think this misplaced focus on free-riding relates to the Robert Laughlin talk I discussed on Wednesday. I suspect that one of the reasons Laughlin is dismissive of business models that involved giving away software is because he’s used to traditional business models in which the marginal customer always imposes non-trivial costs. Companies that sell products made out of atoms would obviously go bankrupt if they tried to give away an unlimited number of their products. ” We’ve never before had goods that could be replicated infinitely and distributed at close to zero cost, and so it’s not surprising that our intuitions and our economic models have trouble dealing with them. But they’re not going away, so we’re going to have to adjust our models accordingly. Dispensing with the concept of “free riding” is a good place to start.

In closing, let me recommend Mark Lemley’s excellent paper on the economics of free riding as it applies to patent and copyright debates. He argues persuasively that eliminating “free riding” is not only undesirable, but that it’s ultimately not even a coherent objective.

Comments

  1. Crosbie Fitch says:

    The term ‘free rider’ cannot be negative or pejorative when applied to permanent and non-consumable things such as human culture and knowledge. The ability to enable people to enjoy free use and access to culture and knowledge is the sort of thing that unites us is it not? To have people ride freely upon our cultural commonwealth is our aspiration.

    However, that should not deny or prevent a free market in cultural work. If you want a bug fixed, no doubt you will find someone in a free market who will willingly exchange their labour in producing a fix for your monetary value of that fix. Nevertheless, we do not need to compel publication of the fix, nor do we need to enable the author to constrain those who receive it against their will.

    Don’t forget that if many value the fix, then there is a greater monetary value that will accrue to the production of the fix, and similarly, a far wider distribution of the fix.

    And if people value the source far more than the binary, then the source will attract a far higher price, which authors would be highly unlikely to forego if there was no incentive to keep the source secret.

    I very much doubt Blender would have sold for as much as it did had only a freely redistributable binary been offered. But, the fact that the binary is far less valuable than the source would not make its sale unethical. If anything, its free distribution would help demonstrate the availablity and market for the source.

    With a free market, once cultural works have been sold to the public, the market tends to saturate very quickly (especially for digital works), and it’s difficult if not impossible to sell people what they already have. Thus the problem for the software producer is not free riders (since the world is supposed to embrace them for culture), but in finding enough interested customers who value their work and will collaborate in collecting sufficient funds that the producer will find equitable in exchange. That’s simply a marketing problem and solved by the same mechanism that enables the diffusion of the works – the Internet.

    Bounties, ransoms, digital art auctions: these are the mechanisms that enable the exchange of free culture for money – without copyright, patent, compulsory reciprocation, or violation of privacy.

  2. Jordan says:

    Wikipedia and Firefox are not perfectly analogous projects, though — there’s some overlap in how new contributions to aggregative reference works and integrated applications affect the whole, but only some.

    I note that you mention “amateur poetry readings” (as opposed to what, I won’t bother to ask) — poetry has been grappling with the issues of collaboration, appropriation, and free-riding for at least ninety years, and if you buy Milman Perry’s ideas about how epics are composed, since the beginning. Basically: all poetry builds on other, earlier poetry — but each poet wants credit for their own work, and outright passing other poets’ work off as one’s own is a no-no. I take it this is because a poem is more like an integrated application than it is like an aggregative reference work, or contrary to a joke of John Ashbery’s, it probably doesn’t turn out that ballads were written by all of society working as a team.

  3. tom s. says:

    Interesting comments – but you do argue against yourself.

    First you say what I think is the best thing in the post – that there is no free riding problem in Wikipedia (it’s not a collective action problem at all) – it’s more like a stage on which editors perform. But then you say that “because the marginal cost of copying and distributing content is very close to zero, institutions can get along just fine with arbitrarily high “free riding” rates” – ie, that there is a collective action problem, but the balance of costs and benefits has shifted. I’m more convinced by your first argument.

    I like the point (albeit framed in terms of your second argument, but it could be equally well framed in terms of the first) that a large audience encourages more performers/contributors. This is surely part of the reason why there is only one Wikipedia and why it should be compared not only to Britannica but to encylopedias of all kinds (especially trivia collections).

  4. Mitch Golden says:

    This analysis is fine, as far as it goes, but it doesn’t go far enough. The issue with Wikipedia (and Firefox, and Linux, and all the other open source software) isn’t the free rider problem, it’s the fact that it disproves the model of homo economicus that is the basis for classical economics and the political philosophy of Libertarianism. There is just no rational reason for people to contribute to Wikipedia – they aren’t paid anything, and the value of any benefit they might be getting from the trivial publicity associated with making an edit is overwhelmed by the cost of the often significant time it takes to do the work. So the question isn’t one of free riding, the issue is to explain why Wikipedia exists at all. (It is, after all, the free riders that are behaving rationally!)

    Once upon a time I was a physicist. If someone floated into the physics department wearing an anti-gravity belt, every single physicist would drop what he or she was doing and try to figure out what was going on. Things like Wikipedia are the economic equivalent of an anti-gravity belt, but for some reason I have found, amongst the economists I talk to, a remarkable lack of curiosity about what the implications are of the existence of Wikipedia on their model of how people behave and how markets work.

    It’s particularly odd that the founder of Wikipedia, Jimmy Wales, is a libertarian. I have often wondered why the success of Wikipedia doesn’t cause him to question whether markets really are the only or the best way to do things.

    • tblee says:

      I wasn’t aware that libertarianism was synonymous with a crude homo economicus model of human nature. Nor, for that matter, do I know of very many libertarians who believe that markets are “the only way to do things.”

      • Tel says:

        Well the very nature of liberty is that various people will do things in various ways, however in as much as the word “market” has a narrow, specific meaning that many people use to refer to our highly structured system of modern trade, it is also valid to see “market” in a broader term whereby any voluntary exchange of goods between parties should be considered trade, regardless of the structural details, or even without much of a structure at all.

        From higher up:

        There is just no rational reason for people to contribute to Wikipedia – they aren’t paid anything, and the value of any benefit they might be getting from the trivial publicity associated with making an edit is overwhelmed by the cost…

        It’s a little bit steep to suppose that the only motivations that could ever be rational are financial payment and publicity. Since no one has yet been able to program an intelligence than can complete even relatively simple real world tasks, I don’t see any compelling evidence for such a trite definition of rationality.

        Suppose I was to keep a notebook with indexed details of all the relevant bits and pieces that I might read about or discover, would the cost of keeping the notebook overwhelm the benefit of having it as a reference to go back to? Many people do keep similar private notes, so there’s obviously some indication that benefit outweighs cost in at least some cases.

        Further suppose that I can merge my notebook with just one other person, and we both have approximately the same cost, but now we double the benefit (no not really double, but good). Is it worth the merge? If I was keeping the notebook anyhow, and the overhead of the merge is minimal then might as well do it. So Wikipedia is essentially just a bigger merge.

        Another way to look at it is that we could all agree that it is rational to at least READ wikipedia, even if you never edit. It is after all a useful reference. But then, if the reference has an obvious defect, omission or plainly incorrect fact then might as well fix that up, because it only takes a moment and then you have a better reference.

        I grow roses in front of my house, because I like the roses, not because I want to impress anyone. Some people walk down the street and also enjoy walking past my roses, but that does not make me angry because I have all the roses I want. Sometimes I go walking past other people’s gardens and have a peek to see all sorts of flowers and statues and silly stuff, some of which I enjoy and some I dislike, but I respect their freedom and individuality in the hope that they respect mine. Together we have a richer environment than we would on our own, I don’t find any obvious flaw in the rationality of such a setup.

    • Frater Plotter says:

      There is just no rational reason for people to contribute to Wikipedia – they aren’t paid anything, and the value of any benefit they might be getting from the trivial publicity associated with making an edit is overwhelmed by the cost of the often significant time it takes to do the work.

      You’re starting from the wrong point.

      You’re assuming that you know what all the possible reasons are for a human action — payment and publicity — and concluding that since neither of them apply, that the action must be taken for some irrational and non-economic reason. Instead, try a different assumption: people do contribute to Wikipedia; now ask, Why do they do it?

      There are plenty of reasons. First up is entertainment value: the value of simply spending time on something that is interesting. This is why people watch television; it’s why they post to Usenet; it’s why they write comments on blogs; it’s why they play video games or board games. Doing so is diverting; amusing; entertaining. Human beings are the kind of creatures who seek diversion and entertainment.

      Then there’s sense of accomplishment. People like to feel that they have done something useful. Contributing to an open-source project, including Wikipedia, gives them this pleasant sensation, whose origins probably have something to do with the evolution of humans as members of society.

      It’s worth noting that explanations of this human action need not be universal. They need not suggest that everyone should contribute to Wikipedia … after all, in reality, only a tiny number of people do. Most people prefer to watch American Idol rather than posting blog comments. I do not; I find American Idol tedious and not-entertaining.

      Do not assume that you know all the reasons that someone might do something, and that anyone who does something not in that list must be acting irrationally. Instead, assume that people do have reasons and motives for their actions, and inquire curiously and open-mindedly into what those motives might be. You will thus learn much more about humanity than you would by sticking with simple-minded assumptions.

      • Mitch Golden says:

        You’re starting from the wrong point.
        You’re assuming that you know what all the possible reasons are for a human action — payment and publicity — and concluding that since neither of them apply, that the action must be taken for some irrational and non-economic reason. Instead, try a different assumption: people do contribute to Wikipedia; now ask, Why do they do it?

        Here’s the point: Suppose I decided to fence off a piece of my property, and put up a sign that said “There’s coal under here. Please feel free to dig some up and put it on that pile on the left. And by the way, if you want to take some coal off the pile, feel free to do so, no questions asked.”

        What do we think would happen in such a case? I think most people would agree that, absent some special circumstance, this would go nowhere. (Though history offers lots of examples of people who believed otherwise, utopian socialists and the like. And, as I said in the response to another post, the founders of the Kibutzes in Palestine/Israel might be counted as such.)

        This becomes in libertarian thought elevated to a parable of the “tragedy of the commons”. It comes up quite often. It is the reason offered for privatizing everything from fishing rights to the national parks. The reasoning goes that people behave in the “rational” way I described, and that is why commons are tragic.

        Yet here we have an example of a very-non-tragic commons. If we change the word “dig” to “write” and the word “coal” to “information”, in the example above, I’ve pretty much described Wikipedia. Now, you say, digging coal is different from writing in Wikipedia. Sure, it is; but as I said before, that is nothing but an excuse for the failure of a model, not a model itself. What is different about writing than digging? Or maybe the verb is irrelevant – is something else going on? Might my “open source” coal mine actually work under some set of circumstances?

        What is needed is to come up with something that describes when Wikipedias work and when they don’t. That is what is missing here.

        • Frater Plotter says:

          The big difference between coal and information is trivially obvious to the casual observer.

          If you take some coal from the pile of coal, there is less coal left for everyone else. If you read some information from a pile of information, there is the same amount of information left over.

          It is not useful to ask, “Are we sure that Wikipedia will work? My theory suggests that it won’t!” It is evident already that Wikipedia does work, in the sense that it has survived as an enterprise for several years now, has amassed a prodigious amount of good work, and has certainly outperformed any unsupervised cooperative coal mines you can point to. If a theory cannot deal with the evidence — if the theory leads people to insist that Wikipedia can’t possibly work, or that the existence of Wikipedia proves that unsupervised cooperative coal mines must work — then so much the worse for that theory.

          Rather, a useful question is, “Okay, Wikipedia does work. Why? How can we keep it working, and indeed improve it, if we care to do so?”

          Likewise, it is not useful to say, “The success of Wikipedia proves that people do not behave in a rational economic way,” merely because one fails to understand the type of economic benefits people reap from participating in Wikipedia.

          Rather, a useful question is, “Okay, people do freely choose to participate in Wikipedia. We must assume that they do so because they get some sort of benefit out of it. So, how can we characterize that benefit?”

          • Mitch Golden says:

            This is the sort of thing I refer to as an excuse, not a model. Let’s use a different example: why don’t people just go out and clean up the sidewalks in their town? There is nothing that is “used up” when we appreciate a clean street. The reason people don’t usually do it is obvious, and it fits the model as to how people behave. The reason they don’t do it is that it takes a lot of work for the cleaner (a costly resource to him), and the benefit is not particular to him, but shared with the free riders. So the street becomes a “commons” and is tragic. Wikipedia is not like that, but no one has explained why.

          • Frater Plotter says:

            I suspect that it’s the same reason that some people volunteer to run marathons or to read difficult novels, even though nobody is paying them to do so.

            In other words: Editing Wikipedia is fun. People choose to do it for recreational value and intellectual stimulation.

          • Miral says:

            I guess the obvious corollory of that is that if cleaning up the sidewalks was (somehow) made fun, then more people would do that too.

          • Tel says:

            If a theory cannot deal with the evidence — if the theory leads people to insist that Wikipedia can’t possibly work, or that the existence of Wikipedia proves that unsupervised cooperative coal mines must work — then so much the worse for that theory.

            Oh you do not understand how economics works!

            If a theory cannot deal with the evidence then we need to beat on the theory harder until everyone has forgotten the evidence, and then ask for more money.

      • Mary Brace says:

        Although I agree there’s a wonderful sense of accomplishment that comes with a Wiki contribution, I also see a very real possibility of tribal loss that occurs when a contributor is over-ruled by Wiki editors who insist that their sources are better than another’s sources.

        Quite often, editors of a particular section relying on opinion articles written ten, twenty, thirty years after a fact that support their view, while simultaneously ignoring and deleting dozens of contributors with first-hand knowledge on the “Talk” page stating, “no it really wasn’t like that.”

        If anything, Wiki demonstrates the need for more first-hand recording, publishing and publicizing of important events and movements. Competing views of history always come into conflict when there’s a buck to be made, somewhere. In Wiki, views compete for mere egos’ sake. It’s ridiculous.

  5. Mitch Golden says:

    A clarification: I didn’t say that libertarianism is “synonymous with a crude homo economicus model of human nature” – I said that it “formed the basis of the philosophy”. The devotion to market solutions advocated by libertarians often stems from a belief in how markets work and the way they allocate resources. “Greed is Good”, “people respond to incentives”, and all that. Along those lines, the quote was “the only or the best way to do things”.

    But let’s leave the libertarians aside. The question remains: the real problem is to explain why Wikipedia exists at all, and why it is (within error bars) the equal of the Encyclopedia Britannica in many ways. There is no model that explains reasonably when wikipedias happen and when they don’t. Invoking the “pure pleasure” of creating is an excuse for the failure of a model, not a model itself. This is what Roberts was talking about, it seems to me.

    • tblee says:

      Well, Adam Smith certainly didn’t agree with “greed is good.”

      But your uncharitable interpretation of libertarianism aside, I agree that there are interesting theoretical questions here that no one has managed to answer satisfactorily. I think Benkler is the best place to start.

      • Mitch Golden says:

        I don’t think one can cite Adam Smith an example of modern day libertarianism, but that’s another story. I don’t want to bring the discussion afield, but I don’t think I am being uncharitable. I don’t agree with libertarianism, but I don’t want to misrepresent libertarians either. Here’s what the Libertarian Party platfrom says http://www.libertarianparty.com/platform

        2.0 Economic Liberty

        A free and competitive market allocates resources in the most efficient manner. Each person has the right to offer goods and services to others on the free market. The only proper role of government in the economic realm is to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is protected. All efforts by government to redistribute wealth, or to control or manage trade, are improper in a free society.

        Wikipedia is, as we have noted, not allocating resources as a market would, and is quite “inefficient”, what with all the corrections, revert wars, etc. The question is why it is able to compete with the Encyclopedia Britanica, which uses a conventional way of moving utility around (the reader pays for it, the publisher hires experts to write sections, and fact-checks and assembles them, etc).

        It is amusing to note that Bekler is a Lawyer and not an economist. It does look interesting, and I will have to read his paper in greater depth.

        • tblee says:

          I’m not going to defend the platform of the Libertarian Party, which is a pretty marginal part of the libertarian movement, and I certainly agree with you that there is a strand of libertarian thought (typified by Rand) that over-emphasizes the market at the expense of other forms of voluntary social cooperation such as peer production. But there’s nothing intrinsic to libertarian thought that compels that conclusion, and more nuanced libertarian thinkers (such Spencer, Hayek, Friedman, and Coase) were careful to avoid the trap of reducing all human interactions to market exchanges.

          On the other hand, I think you’ll find that even most left-of-center thinkers agree with the statement that “a free and competitive market allocates resources in the most efficient manner.” Since the fall of the Soviet Union, the standard criticism of free markets has tended to be not that they allocate resource inefficiently, but that they fail to achieve other values (such as justice, equality, or economic security) that are more important than efficiency. I think the LP passage you quoted is actually consistent with the Wikipedia experience. As you say, Wikipedia isn’t an efficient way to use peoples’ time. But it turns out that this is a case where efficiency isn’t a high priority because the primary input (peoples’ time) is available in abundance. Of course economists have a lot of work to do to explain why so many people are willing to donate their time in such quantities, but I don’t think this is any more a problem for libertarian theorists than non-libertarian ones.

          Thanks for the thought-provoking comments!

          • Mitch Golden says:

            I only used the Libertarian Party platform as an example. I could cite many examples of similar lines of thought from lots of libertarian sources, Reason Magazine say. Perhaps you will reply that the Objectivist strain of libertarianism is just the most popular kind. I am surprised to see you cite Freedman as a “nuanced” thinker not over-enamored of markets. That has certainly not been evident in my reading of him. Here’s what it says about his thought on his Wikipedia page

            Friedman opposed government regulation of all sorts, as well as public schooling. Friedman’s political philosophy, which he considered classically liberal and libertarian, stressed the advantages of the marketplace and the disadvantages of government intervention and regulation, strongly influencing the outlook of American conservatives and libertarians. In his 1962 book Capitalism and Freedom, Friedman advocated minimizing the role of government in a free market as a means of creating political and social freedom.

            (http://en.wikipedia.org/wiki/Milton_Freedman)

            I also think you’re overstating the level of agreement that left-of-center thinkers have with the libertarian view of markets. For example, many (including myself) don’t believe that markets even equilibrate without a healthy dose of government “interference” – an example being the current collapse of the market in credit default swaps. Yes, when the properly function they allocate resources efficiently, but there are plenty of examples of market failures, quite apart from any “externalities” such as income equaltiy.

            (An example relevant to this blog is that “the market” drastically underinvests in basic research. Partly this is because the results of basic research are generally social in nature and can’t usually be realized by those funding the research, but it goes further than that, because the risk aversity of those with money reduces their willingness to invest in things with a small likelihood of payoff. I think we can safely agree that the internet as it is currently constituted could never have been created by the free market.)

            I agree that economists of all stripes have a problem explaining Wikipedia. The additional problem for libertarians is that their political philosophy has much more at stake in the discussion. Wikipedia is a functioning example of an encyclopedia built on the the type of organization that the people who founded the Kibutzes in Israel expected to be able to use in agriculture (and which failed in the long run). The inevitability of “the tragedy of the commons” comes up as a refrain in libertarian thought, and it is often used as a justification for privatizing all sorts of things. Yet Wikipedia is a commons that not only isn’t tragic, it is beating the “farms” that are run for profit.

          • tblee says:

            Thanks for the thoughtful comment. Once again, though, I don’t see anything in the Wikipedia quotation above that contradicts what I’ve said. Obviously the free market is very important to libertarian theory, and libertarian intellectuals tend to extoll it in their writings. But the question is whether they do so to the detriment of other voluntary forms of social cooperation such as Wikipedia. The fact that Friedman strongly preferred the free market to government regulation tells us nothing about how he would have evaluated a private but non-market institution like Wikipedia. He may not have given them as much attention as they deserved, but I’ve read most of his major works and I certainly can’t remember him writing anything that could be construed as hostile to them.

            More generally, libertarianism is a philosophy that advocates limiting the role of the state in society. Libertarians advocate free markets as one alternative to coercive government programs, and for a variety of reasons it tends to be the alternative we talk about the most. But libertarianism does not entail that the market is the only, or even the best, alternative to government programs in any given situation. Demonstrating that some other private, non-market institution—churches, universities, charitable foundations, online communities, families, co-ops—can do a better job than the market for some task doesn’t in any way undermine the libertarian argument for limited government. If anything, it strengthens the libertarian case for limited government by expanding the list of social goals that can be accomplished by civil society rather than the state.

          • Mitch Golden says:

            I agree with everything you said, (except that I take issue with your description of Freedman as “nuanced”) but I think you’re still not grabbing the bull by the horns, as it were. No one wants to limit human freedom for no reason, and everyone accepts that there are some things in civil society that are performed better outside of markets – raising families, for instance. That isn’t what sets libertarianism apart from other political philosophies.

            Markets play a particular role in libertarian ideology, and it isn’t just that they arise in the absence of government regulation. According to libertarian thought (as both Freedman and the Libertarian Party emphasize), markets optimize human wealth because they optimally allocate resources. If this isn’t true, then the case for libertarianism is fatally weakened. Why argue against (for example) banking regulations as a matter of principle if the net result of the regulations would be a better-functioning banking system? Do libertarians really care about the “liberty” of bankers so much? No, libertarians believe that the regulation isn’t just bad for some “aesthetic” or “moral” reason only, they believe that in practice the regulations impede the market from finding the optimal allocation of resources, and that, as a result, prosperity is reduced.

            Again, this line of reasoning manifests itself in the number of times the “tragedy of the commons” comes up in libertarian thought. For example, if you search for that phrase on the Reason Magazine web site,

            http://www.reason.com/search/results/?cx=000107342346889757597%3Ascm_knrboh8&cof=FORID%3A11&q=%22tragedy+of+the+commons%22&sa=Search#1364

            There are 107 article that touch upon it, most seemingly from the past 2 or 3 years alone.

            Compare (as an example) to the same search on The Nation magazine’s website, where the phrase appears a total 7 times since 2003, seemingly all in the discussion thread of a single article.

            http://www.thenation.com/search/?search=%22the%20tragedy%20of%20the%20commons%22

            Libertarians emphatically don’t accept that commons-based solutions work for economic problems. So, while they may not explicitly use a “crude model of homo economicus” when they are discussing these matters, lurking in the background are assumptions that are the equivalent.

            Now here is an example – production of an encyclopedia – where a priori the situation looks to be of the sort that should be described as a “commons”. People’s time is exactly the sort of costly, limited resource that the market needs to allocate. This is why, as you originally stated, most economists in the past would have believed that an encyclopedia couldn’t be produced in this way. People would no sooner write articles for free than dig coal. And yet… here we have Wikipedia. All we have gotten from the economists (of all stripes) and the libertarians are various excuses for why their models don’t work, but no models that really explain what is going on.

            So, it is not that libertarians want to do away with Wikipedia, it’s that they’re ignoring the deeper meaning about what its success says about what underlies their policy prescriptions.

          • Frater Plotter says:

            No one wants to limit human freedom for no reason, and everyone accepts that there are some things in civil society that are performed better outside of markets – raising families, for instance.

            On the contrary, market freedoms are essential to raising a family — or operating a church, or creating Wikipedia, or any other cooperative enterprise.

            The free market is not merely about buying and selling scarce resources. It is about freedom to choose among the alternatives that are on offer, based on one’s own preferences and benefit. It is the freedom to join with others in transactions, contracts, agreements, arrangements, institutions — or to refrain from doing so. It is the absence of compulsion in these matters.

            The market is not just freedom of buying and selling. It is freedom of choice and freedom of contract.

            Consider:
            The freedom to choose among potential willing marriage partners, in forming a family, based on your own preferences; or to choose to remain single. There is a “market” for partners, wherein two people may meet, gain each other’s trust and affection, agree upon terms, and join with one another in an arrangement of one sort or another.The freedom to choose amongst religions, or to choose none at all. There is a “marketplace of ideas,” in which potential adherents may learn about, discuss, and choose to commit (or not to commit) to membership and belief in a particular church.The freedom to engage in recreational activities with other willing participants, or to decline an invitation to do so. Again, there is a “market” for each participant’s time, in which they freely choose how to spend that time.

            The applicability of market freedoms to family life does not mean that anyone is buying and selling mates or children. It means that people are free to choose whether to enter into such commitments, based on their own preferences and values; that they are not compelled to marry or give birth against their will; and that once they have entered into such commitments, they are duty bound to uphold them — e.g. to refrain from cheating, child neglect, etc.

          • tblee says:

            I think part of the problem here is that you and Mitch are using different meanings for “the free market.” He’s drawing a distinction between financially-intermediated, for-profit transactions and other kinds of transactions. You seem to be using “the free market” as a shorthand for voluntary institutions of all types, whether they involve monetary transactions or not. One definition isn’t inherently better than the other, but I think the discussion might proceed more productively if you agreed on some common definitions.

            Personally, I think the market/non-market distinction Mitch is drawing is a sensible one, and more importantly it’s the one in common usage. People don’t generally think of getting married or selecting a religion as market transactions, and you’re setting yourself up for confusion if you try to describe them that way.

          • Frater Plotter says:

            Yeah, but some folks are assuming that libertarian support for freedom extends only to monetary transactions, and not to voluntary institutions of all types. That’s a pretty big mistake to make.

          • Mitch Golden says:

            To sharpen the point Tim raised. The issue of having the government choose your spouse for you is not being advocated by any political tendency in the US context. (The closest thing is actually the issue of gay marriage, which is more of an issue between the Christian Right and the economic libertarians with whom they are currently allied than between “liberals” and libertarians.)

            I agree with Tim that the use of the word “market” to describe the process by which people choose spouses is stretching the term too far. At any rate, I don’t think the existence of Wikipedia bears on it.

          • Frater Plotter says:

            Nobody is suggesting that the government write encyclopedias, or forbid the writing of encyclopedias, either. :)

          • tblee says:

            OK, I think I see the source of our disagreement. Libertarians regard the public/private distinction as the fundamental one. For us, markets and private, non-market institutions like Wikipedia are on one side of the line, while government programs are on the other. You seem to be drawing a different line, with markets on one side and “commons” (which includes both government programs and private, non-market institutions) on the other. If you’re used to looking at the world through this markets/commons dichotomy, libertarians’ advocacy of markets looks like hostility to private, commons-based institutions. But for those of us who regard the public/private distinction as the more fundamental one, Wikipedia and the free market are in the same broad category of voluntary private institutions.

          • Mitch Golden says:

            I don’t think that is the crux of the argument, as I am not claiming that libertarians are hostile to Wikipedia. I know that libertarians are hostile to government but not to other forms of associations. That’s true, but it isn’t a sufficient understanding of the policy prescriptions of libertarianism Libertarians advocate market solutions because they feel that other kinds don’t work. Why else does “the tragedy of the commons” play such a large role in libertarian thought? The “commons” is not a government program.

            Again, libertarians are not merely claiming that they have an irrational dislike of government rules. As I said before, if that were the whole argument it would fatally weaken libertarianism. There is more in the libertarian philosophy: human “liberty” (i.e. freedom from government coercion) improves our standard of living.

            Here’s an example: suppose there is a fishery with a limited supply of fish. Libertarians (of all stripes) make the argument that the proper way to allocate the fish is to create property rights in the taking of fish from the fishery. These rights would be sold, and whoever buys the right to take the fish can use it to go out in his boat and cast nets. Each of the holders of the property right has a “homo economicus” interest in seeing that property rights are obeyed – someone who is taking more fish than he is entitled to is taking someone else’s fish, and that person will act to preserve his property. In this manner, the fishery is preserved, and the limited resource is optimally allocated.

            No libertarian would argue that the proper way to resolve this is to create a commons, where people allocate the resource in some cooperative manner, say, for example, by having a town meeting in which the fishermen decide when each boat in town is allowed to go out.

            Note that the government plays a very similar role in either case – in the libertarian example because a police force and/or court system has to be set up to enforce the property rights, and in the second because the police force enforces the town meeting’s restrictions.

            The existence Wikipedia is a direct challenge to this reasoning. If there are cases when the commons is not tragic, then the government might be well-justified in trying to bring them about – as in other cases it brings about markets by enforcing property rights. Because (as I think we agree) we have seen nothing but excuses from the economists and libertarians about when commons work and when they don’t we don’t know which is the proper role for the government to play. For non-libertarian economists this is an interesting policy question; for the libertarians it is central to their ideology.

          • tblee says:

            . Why else does “the tragedy of the commons” play such a large role in libertarian thought?

            Again, I don’t think it does. I’m not sure who you’re paraphrasing here or why you think the tragedy of the commons is central to libertarianism. That hasn’t been my experience, but perhaps you’ve been reading different libertarians than me.

            No libertarian would argue that the proper way to resolve this is to create a commons, where people allocate the resource in some cooperative manner, say, for example, by having a town meeting in which the fishermen decide when each boat in town is allowed to go out.

            Actually some libertarians make precisely that argument.

          • Mitch Golden says:

            This is getting narrow, so I will keep this short. I think that the article you link is an example of what I am talking about, not the opposite. The idea is to give the communities property rights in the commons, and thereby avoid the tragedy. (He even uses the word!) Since these are precapitalist societies, the libertarian argument is modified, but the core remains the creation of property rights.

            But I will turn it around, What is the reason libertarians abhor government “coercion” and prefer unregulated markets? If it isn’t just a preference like that for Cherry Garcia instead of Phish Food, what is the reasoning? Are you saying that the assertion that we’re better off under market solutions plays no role?

        • Frater Plotter says:

          Wikipedia is, as we have noted, not allocating resources as a market would

          Again, that’s not the point.

          People participate in Wikipedia because they choose to do so. Their participation is not compelled; it is freely chosen. The freedom to engage in voluntary, cooperative projects is part of the freedom embraced by libertarianism. “The free market” includes the freedom to participate in joint activity for reasons other than money; it includes the notion of voluntary, cooperative projects such as charities, churches, social events, and … yes … Wikipedia.

          The market does not allocate resources. Rather, “the market” is an economic fiction for the summation of all individual choices to allocate resources. Some individuals choose to volunteer their time through a church, or a charity. Some choose to spend their social lives on pursuing sexual pleasure; some on watching football with friends; some on raising a family. Freedom includes the freedom to make these choices, and any sensible notion of “the free market” includes all these charitable and social choices as well as all the choices that actually involve money.

          • tblee says:

            Frater, the dictionary defines a market as a “meeting together of people for the purpose of trade by private purchase and sale.” This the “purchase and sale” part is important. There are some circumstances where buying and selling are a good way to accomplish our objectives. There are others—families, churches, Wikipedia—that don’t work by buying and selling among the participants. I think you’re likely to confuse people by describing all of these activities as being part of “the market.” That’s not the way the term is used in ordinary English. And if we libertarians insist on describing things that way, we’re going to give people the false impression that we’re opposed to voluntary social institutions that don’t involve buying and selling stuff. Which of course we’re not, but it’s understandable that people would have that misperception if we use the word “market” in a confusing way.

  6. Richard Bennett says:

    I dunno, Comrade Lee, what you’re on about. The rules of Wikipedia require everybody to free-ride all the time: “no original research.” So the entire project is a race to copy/paste the juiciest agenda-serving quotes into the articles. It’s like singing in the church choir, something people do because it’s the only way they can get any attention or power over others. Wiki editors are pathetic little gits who live in the moms’ basements and have no social life. It’s non-economic activity. Bring some ads into it, and it all goes away, I betcha.

  7. Stevo says:

    Economic theory can explain why free riding is not a problem.

    Wikipedia is a pure public good. It costs nothing for more people to enjoy it, and you can’t exclude people from it. The socially optimal level of production is only limited by how many people read the internet, that is to say, infinite. On a social level, the cost of another click on a web site, one more download, one more reader is essentially zero.

    Free riding means that, for pure public goods like the internet, as production increases infinitely, prices drop, and soon individuals stop producing because it doesn’t pay. This is the music apocalypse theory the RIAA talks about. But content posters on Wikipedia do not produce for any price. They produce for free. The only constraint they have is hours in the day. So on a micro level, the individual level, the cost of production is zero, even negative. With an infinite number of content producers willing to work for free, there will never be free rider problem. There will always be someone willing to produce something, and when they bring it into the world it is infinitely reproducible.

    The only way Wikipedia, or any other free scene works economically is because 1) posting is easy, i.e. cheap, 2) when it stops being cheap for a producer there is always someone willing to work for free, 3) Anything produced can be copied infinitely without cost.

    I am no PhD, but this is basic economics applied to unconventional goods. I recommend Joseph Steiglitz for more information.

  8. Dan Simon says:

    I don’t know why doubts about the long-term viability of Wikipedia would revolve around the “free rider” problem–as you point out, amateur, volunteer activity has existed since the dawn of time. The question at hand is what happens when an amateur, volunteer activity takes on a significant social role normally associated with professionals–such as an amateur entertainment group becoming nationally popular, an amateur athlete or team winning international contests, or an amateur encyclopedia becoming a widely-relied-on authoritative information source.

    This kind of elevation of status creates several threats to amateur groups:

    - Commercial co-optation: entrepreneurs, seeing a profit opportunity, start offering the amateurs a cut in return for going pro. If the opportunity, and hence the temptation, is great enough, then it almost always wins out. I’m sure that as we speak, numerous enterprises are calculating how much they could make by running Wikipedia as an advertising-based service, and how much they could therefore offer Wikipedia’s masters to try to tempt them to sell out.

    - Non-commercial co-optation: amateur success can be exploited to advance agendas other than profit, such as political or religious causes. As I understand it, there are already groups dedicated to influencing Wikipedia’s content in one direction or another. As Wikipedia’s popularity and authoritativeness grows, such efforts can be expected to increase dramatically, possibly at the behest of powerful and/or well-heeled interests.

    - Internal dissension: As anyone who’s held a (real, i.e., non-academic) job knows, personal conflicts can severely undermine work output even in professional settings. In amateur groups, the absence of a need to get the job done to put food on the table substantially lowers the bar to such shenanigans.

    Wikipedia is still very young, and its status as a quasi-authoritative source is even younger. The path from “spectacular success credited to a revolutionary new organizational model”, to, “rapid collapse blamed on an unviable organizational model” is well-worn, and only time will tell if Wikipedia manages to avoid following it.

  9. tblee says:

    Mitch, related to the elephants: now I’m confused. What’s the difference between a policy that “gives the communities property rights in the commons” and one that “creates a commons, where people allocate the resource in some cooperative manner, say, for example, by having a town meeting?” It seems to me that the policy is identical, the only disagreement seems to be over the label that we’ll attach to it: “property” or “commons.” If that’s all we’re disagreeing about, I’ll gladly concede that libertarians are more fond of the word “property” than non-libertarians are. If the kind of community ownership and management described in that podcast is not a commons, then I have no idea what you mean by the term.

    I don’t think this is the place to re-hash the libertarian argument for limited government. The libertarian philosophy has a number of strands, so it’s a mistake to try to identify a single argument that’s representative of all libertarian thought. But personally I find Hayek’s argument about the limited information of centralized decision-makers to be most compelling. Interestingly, Hayek’s argument about the superiority of decentralized markets to centralized government planning works equally well (as Cass Sunstein pointed out) as an explanation for the superiority of the decentralized Wikipedia process over the centralized Britannica editing process. Likewise, Benkler’s explanation for the success of free software relies heavily on the work of Chicago School Nobel Laureate Ronald Coase. And Tim Wu has pointed out that Hayek’s insights can help to explain why overly-strong patent rights can retard economic efficiency. If libertarian theory has so much trouble explaining peer production, then why are liberal scholars drawing on libertarian insights when writing about these subjects?

  10. Mitch Golden says:

    (OK, so we’re wide again!)

    First: the conventional libertarian argument about environmental issues is that the resource that requires protection should be privatized. To protect elephants, allow people to own them – even in the wild – and do with them what they will, including sell their ivory. Their ownership gives people an incentive to protect their property, thereby increasing the numbers of elephants. Here, for example, is a Cato Institute paper making precisely this point: http://www.cato.org/pubs/regulation/regv23n4/stroupbrown.pdf – and 30 seconds of googling will reveal lots of others. (I assume you won’t tell me that the Cato Institute doesn’t represent libertarianism.)

    Now the one you sent along is a perturbation on this theme, where the ownership is collectively exercised by the villagers who live near the elephants. This is still a privatization, in the sense that they own the elephants and not the poachers who are taking them now. Since the village is a tribal, precapitalist place, the libertarian argument has to be modified, but the core of it remains. It’s more or less like giving the elephants to a family.

    (BTW, I find somewhat persuasive the libertarian argument on many of these matters, as do many environmentalists.)

    The example I was positing was that the government of a fishing town (in the US!) would, at a town meeting, make the decision based on a vote as to who would get to fish when and how much he could take. This is rather different than the elephants in your reply, and I find it rather unlikely that the Cato Institute would find this preferable to a system in which fishing rights could be traded.

    Second: I am quite surprised that you don’t think that the tragedy of the commons plays a large role in libertarian thought. As another example, I searched for the phrase on the Cato Institute site, and it appears 58 times:

    http://216.185.11.243/search?q=%22tragedy+of+the+commons%22&btnG=Search&site=cato_all&client=cato&filter=p&lr=lang_en&output=xml_no_dtd&proxystylesheet=cato&getfields=summary

    Even the example you sent along not only discusses the concept, but uses the phrase.

    By my reading, virtually all threads of modern libertarianism take as a core value private property and the justification of it as the engine for prosperity. The existence of a “tragedy of the commons” is a central part of that. Yes, I know that minimizing government “coercion” is a libertarian value – maybe even the one they feel is primary. But it would be a hollow value if it weren’t for the idea that private property and the market create wealth.

    Wikipedia has been a success at precisely the type of endeavor at which the utopian socialists tried and failed, repeatedly. It is people working for a common good, receiving little or nothing of value in exchange, other than the knowledge that there is a public benefit. I don’t think enough people realize how remarkable it is (and I think Linux is even more remarkable IMO) – maybe because Wikipedia is so prosaic when you look at it that it seems just to make sense. But in economic terms It is a perpetual motion machine or an anti-gravity belt. It is a successful example of the sort of thing that thinkers at least as far back as Jesus Christ wished would happen, but never did, or at least not in any sustained way – and the failure of which economists thought they had understood. If Wikipedias often worked in the real world, (as I said in another comment) our streets would be clean because people picked up each others trash, collective farms would be productive because people would happily work to see the big pile of hay they built together.

    I really think that it’s pretty far from what libertarians think is the way the world works, and so yes, I think it’s a big problem for libertarians.

    Third: there are lots of ideologies between libertarianism and “centralized government planning”. I am not surprised that libertarians have ideas that are relevant, and that non-libertarian thinkers find persuasive sometimes. Just because one accepts that there are sometimes too many government regulations, it doesn’t mean that one has to accept the extreme, libertarian position (a la Freedman) that government regulations are always bad.

    As I said, even though I think the core of libertarianism is misguided, I find the environmental (and other) ideas can sometimes be useful. It doesn’t mean I think the libertarian thinkers have thought through in a deep way the meaning of Wikipedia for their ideology.

    • tblee says:

      As another example, I searched for the phrase on the Cato Institute site, and it appears 58 times

      There are a lot of articles on Cato’s site. For example, “coercion” appears 1990 times, “property rights” appears 3270 times, “unintended consequences” appears 1990 times, “moral hazard” appears 472 times, and “spontaneous order” appears 175 times. I don’t disagree that libertarians sometimes talk about the tragedy of the commons (As do non-libertarians) but it’s nowhere close to being at the core of the philosophy or the most frequent subject of conversation.

      I really think that it’s pretty far from what libertarians think is the way the world works…

      Which is where I think we disagree. I don’t think you’re accurately characterizing the views of libertarians. From a libertarian’s perspective, what’s unique about Wikipedia is that it’s an example of the production of public goods without coercion.

      • Mitch Golden says:

        It is an example of production without coercion true, but also without property rights – your most popular phrase on Cato’s site, and, I hope you’ll agree, the true core of libertarian thought. Wikipedia’s is a utopian socialist mode of production, which would be immediately recognizable if the output were vegetables or automobiles rather than an encyclopedia. Now it may in fact be the case that libertarians are amenable to utopian socialism if it’s not coerced by the government. That may even be discussed by some of the intellectuals of the movement. But it is undeniable that the vast majority of libertarians in practice look for market solutions and not utopian socialist ones. Their policy prescriptions do not militate toward a search for utopian socialist ideas, but rather those based on privatization and capitalism.

        Many years ago I used to be a libertarian and read quite a lot about it. I slogged my way through the hundreds of dreary pages of Ayn Rand (I have always felt that Atlas Shrugged is one of the worst books written in the english language, and that was before my political ideas diverged from hers). I read books and essays on the subjects. To this day I catch up on Forbes, The Economist and Reason magazines. I don’t think I am misrepresenting their ideas.

        My wife works at ABC News 20/20, where one of the nation’s most prominent libertarians, John Stossel, holds forth on whatever suits his fancy. (And I talk to the libertarians who work for him.) And in all the time I have followed him, I never saw a piece from him complaining about the Patriot Act. A more pressing concern for him, as with most of the libertarians I speak to (and including, as we have noted, Milton Freedman) is the need to privatize education, or at least have school vouchers. He regularly goes on and on about regulations that interfere with the market, but not so much about other government coercion. (He also once did a whole piece on the tragedy of the commons, BTW.)

        Now if one truly believed that utopian socialism worked, even occasionally, you might be agitating not for privatized schools or vouchers, you would at least consider the approach of utopian socialist ones. I am not suggesting that I would favor that approach, but I can guarantee you it’s pretty far down the list of libertarian ideas.

        • Frater Plotter says:

          It is an example of production without coercion true, but also without property rights

          [citation needed]

          Every Wikipedia contributor retains copyright to their contributions. You aren’t permitted to contribute material to which you do not own the copyright or have a legitimate license to redistribute it from the copyright owner. Wikipedia is precisely a public good produced through the voluntary contribution of private property.

          (I understand that you have met some libertarians of the “Greed is God” mentality. Please understand that this is not representative of the entire spectrum of libertarian politics. The thing that all libertarians have in common is non-coercion. While some libertarians are suspicious of “sharing” in general — usually because it is sometimes a euphemism for “stealing” — all libertarians are opposed to coerced “sharing”.)

          Wikipedia is like the story of “Stone Soup”: aggregating lots of small, seemingly inconsequential voluntary contributions produces a large benefit that can be shared by all.

          There is nothing “utopian socialist” here. Socialism is all about coercion. Socialism is the idea that the people who have resources will not contribute them unless they are forced to do so — through taxation, expropriation, threats of violence, or the like. That is the notion that is destroyed utterly by the existence of a “Stone Soup” project like Wikipedia.

  11. Robin says:

    “no one has yet figured out how to peer-produce Hollywood-quality motion pictures, for example”

    not so the resulting effort has been successful on a national scale, no. but for your reference, efforts are underway out there to explore and refine how this can be done:

    http://www.shortproject.com/web/guest/home

    http://www.bigbuckbunny.org/

    and my thanks to all the contributors above for a mind-blowingly esoteric discussion ranging from elephants to ayn rand to gay marriage to joseph steiglitz :) .

  12. Kragen Javier Sitaker says:

    Some economist once explained “the free riding problem” to me more or less as follows.

    The “free rider problem” isn’t that free riders are getting benefits from Wikipedia. The “free rider problem” is that Wikipedia is underprovided relative to the efficient outcome because of its producers’ inability to internalize its benefits.

    Actually, I think he used less jargon, and we were talking about free software. I hope the underlying idea comes through. Imagine a world where somehow the benefits of Wikipedia were internalized without negative effects, enabling people to spend as much expert time editing it as the expert time people save by having access to it. Wikipedia could be so much higher-quality!

  13. Anonymous says:

    I don’t know if anyone i still paying attention to this post, but I would like to point out one thing in the debate on libertarians and wikipedia:

    Wikipedia isn’t a “commons”. Quite the opposite, it is private property, the owner of which has chosen to allow the whole world to edit. There are moderators, etc. set up by the private person/organization that runs Wikipedia.

    When people use “commons”, most of the time they’re either talking about property that nobody has any control over (which does result in the ‘tragedy of the commons’ situation) or property owned directly by the government. Wikipedia is neither.’

    Hope that helps clarify some things