The Economics of Symbolic Exchange PDF
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The Economics of Symbolic Exchange Alexander Dolgin The Economics of Symbolic Exchange ProfessorAlexanderDolgin FundforScientificStudies BolshayaAkademicheskaya Str.5,Bldg.1 Moscow Russia127299 [email protected] ISBN978-3-540-79882-8 e-ISBN978-3-540-79883-5 LibraryofCongressControlNumber:2008927235 ©AlexanderDolginandSpringer-VerlagBerlinHeidelberg2009 CreativeCommonsAttribution-NoncommercialLicense Subjecttotheexceptionimmediatelyfollowing,thisbookmaynotbereproduced,inwholeorinpart, inanyform,withoutwrittenpermissionofthepublisher.ThisworkislicensedunderaCreativeCom- monsAttribution-NoncommercialLicense.Noncommercialusesarethuspermittedwithoutanyfurther permission from the copyright owner. Commercial duplication of this publication or parts thereof is permittedonlyundertheprovisionoftheGermanCopyrightLawofSeptember9,1965,initscurrent version,andpermissionforsuchusemustalwaysbeobtainedfromSpringer.Violationsareliableto prosecutionundertheGermanCopyrightLaw. Theuseofgeneraldescriptivenames,registerednames,trademarks,etc.inthispublicationdoesnot imply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevantprotective lawsandregulationsandthereforefreeforgeneraluse. Coverdesign:WMX-Design Editedby:ElenaLebedeva Translatedby:ArchTait Printedonacid-freepaper 9 8 7 6 5 4 3 2 1 springer.com Foreword AlexanderDolgin’sEconomicsofSymbolicExchangeisinrealitynotonebutthree books, and although these semantic layers are interlinked, the reader will need to choosebetweenthedifferentvectorsandmodalities. One clearly evident dimension is research. Certain authors introduce quite new intellectualapproachesintoscientificdebate.Thisrequiresaspecialframeofmind and a searching curiosity about social reality. Carl Gustav Jung identified a phe- nomenonwhichhe called systematicblindness:when a sciencereaches a stage of maturityandequilibrium,itcategoricallyrefuses,fromasenseofself-preservation, tonotecertainfactsandphenomenawhichitfindsinconvenient.InAlexanderDol- gin’sbookwholecomplexesofsuch“non-canonical”materialaretobefound.Here arejustafewexamples:fileexchangenetworks,throughwhichdigitalworksofart arespreadthroughtheInternet;bargainsalesoffashionableclothing;theparadoxof equalpricingofculturalgoodsofvaryingquality;andadiscussionofwhetherpa- tronageorbusinesshasthemoreproductiveinfluenceoncreativity.Obviously,not alltheissuesVolginraisesaretotallynew,butbroughttogetherandexaminedwithin anelegantlogicalframeworkofinformationaleconomics,theyposeachallengeto scientificthinking. Suchchallengesarebynomeansimmediatelyor,insomecases,everacclaimed bythescientificestablishment.J.K.Galbraith,forexample,agreatAmericanecono- mist,whoseworksarereadthroughouttheworld,whointroducedawholerangeof cruciallyimportantconcepts,thedirectorofJohnF.Kennedy’selectioncampaign, didnotlivetoseeeitheruniversalscholarlyacclaimortheawardoftheNobelPrize. AlexanderDolgin’sbookbringstogetheranimmenseamountofmaterialrelat- ing to the cultural marketplace, among which I discovered a great deal of interest to myself. I found his researches into segments of the grey economy particularly engrossing—the activity of ticket touts, semi-legal file exchange services which possibledownloadingofmusicandvideosfromtheInternetfreeofcharge,etc.His excursionsintotheterritoryof thegreyeconomyenableus tosee gapsin “white” marketsandtodisproveagreatmanymyths.Inparticular,onecanargueendlessly thatuniformpriceforculturalgoodsistheonlyprinciplepossible,untilitispointed outthattoutshavenoproblemindifferentiatingprices.Thissimplydoesnotfitwith theviewtraditionalamongeconomists.Stereotypescrumbleandweareobligedto take a new look at the situation. The material which the author has assembled by gives us a new perspective on many aspects of contemporary culture, altering our perceptions.Thisinitselfwouldbesufficientjustificationforthepresentbook. Theseconddimensionofthisvolumeisanattemptatscholarlysystematisation. Thenon-professionalreadermayhavedifficultieswithascholarlymannerofexpo- sitionwhichapproachesthesameproblemseveraltimesondifferentlevels,indiffer- entcontexts,andusingdifferentpremises.Oneofthetopicscentraltotheresearch isadverseselection,andthisisviewedvariouslyasatopicrelevanttothemusicin- dustry,thenmorebroadlywithintheframeworkofdigitalproductsingeneral,then A.Dolgin, TheEconomicsofSymbolicExchange, v ©AlexanderDolginandSpringer-VerlagBerlinHeidelberg2009 CreativeCommonsAttribution-NoncommercialLicense vi Foreword on examples of physical works of art. The reader unfamiliar with scholarly ways mayfindthisdisruptstherhythmofthenarrative,butprofessionalscholarswillbe undismayed.Theauthorconstructsasystemonseveralplaneswhichadvancesfrom culturaleconomicstoanewtheoryofinstitutionaleconomicsandinterpretationof theeconomicsofwellbeing. Byembarkingonthisnewpath,Volginlayshimselfopentoattackonawidefront bytheoreticiansregardingtheprecisionwithwhichparticularconceptsareused:for example, the extent to which adverse selection differs from other forms of pre- or post-contractual opportunistic behaviour. I would vigorously defend him against such charges. One could try to analyse adverse selection by pedantically filling in atableoftheoreticalconceptsandagonisingoverwhatshouldbeenteredinwhich box,butletusrememberthatwasnotbyanymeansthewayinwhichAkerlofcame to win the Nobel Prize for his work. His achievement was not in splitting hairs or engaginginintellectualcalligraphy,butinidentifyingandclarifyingmatterswhich wereextremelyhardtopindown.EvenbeforeAkerlof,someeconomistshadbeen uneasyabouttheideathatcompetitionwasinvariablybeneficial.Otherscholarshad raised doubts more than once, but it was Akerlof who identified the crucial factor that,iftheconsumerisinnotinapositiontoassessthetruequalityofaproductor service,competitionmayproduceanegativeeffect.Writingaboutthesecondhand carmarket,hedemonstratedhowsuperiorproductswereforcedoutofthemarket. Thearticlecausedaworldwidesensation15yearsago.Akerlofreceivedwidespread recognitionforhisworkandeventually,in2001,theNobelPrize. Totakeanotherexample:for30yearstherewasadebateabouttheformulation oftheCoasetheorem.(Coasehimselfwiselykeptoutofit,commentingonitonly later,intheForewordtoare-publicationofhisclassicarticles.)Itseemstomethat, intheearlystages,itisnotessentialthatformulationsshouldbebeyondreproach. Coase was the first to point clearly to the importance of transaction costs, and af- ter that it was difficult for anyone else to ignore them. An intellectual revolution had occurred. It was realised that, in the course of their existence, social and eco- nomicsystemsovercomearesistancewhichcanbemadeevidentusingtheconcept of transaction costs. Before Coase, economics was blind to that and found itself helplessinanumberofareas. Chisellingoutthefinedetailofformulationsisundoubtedlyanimportantactivity. Ifthepresentvolumeleavesroomforfurtherworkinthisdirection,itstreatmentof adverseselectionconveysthegistofAkerlof’stheoryimpeccably:intheabsenceof particularinstitutions,competitioncanhavenegativeresults.Inculturetheproblem isallthemoreacutebecausereachingconsensusonqualityis,arguably,moredif- ficultherethananywhereelse.Onecouldseekendlesslytoperfectthetreatmentof adverseselection.Itisevenpossibletodoubtwhetheritoccursinculture,although I personally think its presence is absolutely clear. It seems equally clear that what influencesthepriceofatickettothemoviesismorethequalityoftheseatsandthe availabilityofpopcornthantheactiononthescreen.Thatbeingso,itisunimportant whetheradverseselectionisevidentineverysegmentofcultureoronlyinsomeof them, whether it operates all the time or not. An antidote needs to be found, and this,ultimately,isthetaskourauthorhassethimself. Foreword vii This brings us to the third and, for me, most important dimension of the book. Thedevisingandcreatingofinstitutionsislittlerecognised,unsung,buthistorically essential.Itisanactivitywhichoftengoesunnoticedbecausetheoreticaleconomists popularlysupposethatinstitutionsappearoftheirownaccord:ifademandarises,a correspondingsupplywillautomaticallyappeartosatisfyit.Thisisbynomeansthe case.Thenamesofpioneersareroutinelyforgotten,anditeverythingisbelievedto havecomethroughspontaneousgeneration.Howmanypeople,forexample,realise that the day nursery for pre-school children did not just happen but was invented by Robert Owen and his followers? They dreamed up and tried out a great many things,someofwhichweresuccessfulwhileothersdidnottake.Thesameistrue ofprofit-sharingbyworkersintheenterprisewheretheywork,implementedforthe first time by Owen’s admirers in England. Another example is the system of self- service,thoughtupinthefirsthalfofthetwentiethcenturyinaSwedishconsumers’ co-operativeanddestinedtospreadthroughouttheworld.Theseinstitutionsdidnot justhappen:theywereoriginatedbyparticularindividuals.Theirinventorshaveto make considerable efforts, both in terms of technology and of social engineering, beforetheytakeoffanddeveloptoastagewheresocietycantakethemup. Alexander Dolgin has produced something of this kind, which may ultimately cause a new institution to appear. This, I have no doubt, is the most important di- mensionofthebook.Hehasbroughttogethertwoinnovativeideasofcollaborative filtrationand gratuitypaymentfor culturalgoods. Both are expressed in monetary termsbutamounttolittleontheirown.Togethertheypromiseanimportantreform. From the outset I was intrigued by Alexander Dolgin’s experiments. When he conducting the Theatron and Cinema projects to test two-stage payment for cin- ema showings and theatre performances, I feared the results for the theatre might bequitedifferentfromthoseinthecinemaandthattheideawouldproveapplicable only to mass culture. The theatre is an intimate, labour-intensive art form, and in suchindividuallycraftedworkthereisadifferent,moreimmediatefeedbackfrom theconsumertotheprovider.Infact,muchthesameresultswereobtained,which suggeststhatcollaborativefiltrationcanbesuccessfullyappliedindifferentspheres. Clearly,theconceptofusingcollaborativefiltrationandgratuitypaymentsbycon- sumersasadefencefromadverseselectioninculturedeservestobelookedatvery closely. I believe the author could have limited himself to publishing his basic concept anddescribingtheseexperiments.Heneededonlytoaddadescriptionoftheprece- dentsofcollaborativefiltration,andtoshowhowandwhybigbusinesssubordinated the innovation to its own interests, emasculating it in the process. As soon as the newsystemshowedsignsofsuccessandgrowingappeal,thedominantinstitutions turnedittotheirownadvantage.Inordertopreventthisfromhappeningagaininthe future,meansneedtobebuiltinofprotectingtheinstitution,primarilybyensuring thatitisfinanciallyself-sufficient. It is apparent from the general tone of the book that Alexander Dolgin’s main concern is to see the establishment of a widely ramified, independent testing in- stitution. Let us hope his project brings about its creation. Because he has not re- stricted himself to explaining the thinking behind this institution, but has chosen viii Foreword also to show how it fits into and modifies existing economic theory, there is some riskthattheoreticianswillbeabletofindfaultwiththescholarlysystemanddelay large-scaleexperimentation.Thiscouldsetbackthedevelopmentofthenecessary institutions by a further 20 years or so, and lead to their appearing not in Russia butsomewhereinIndia,notintheearlytwenty-firstcentury,butinmid-century.In themeantime,moreculturalcreativeenergywillbesuckeddownintothevortexof adverseselection. Withoutaseriesoftestprojects,nobodycansaytodayforsurewhetherintroduc- ingpostfactumgratuitypaymentsforculturalproductsonalargescaleisapractical possibility, or what benefits it might bring. At first sight this might seem utopian, butmanyimpracticalideasarefound,oncloseracquaintance,tobeentirelyrealis- tic.Agooddealissaidinthebook,forexampleabouttheprospectsforestablishing gratuitypaymentsasanorminsociety.Hereitmaybeusefultolookattheplaceof charitablegivingintoday’sworld.Inmanycountriesthisiswidespread.Donations aremadetohelpchildreninAfrica,ortoencouragethedevelopmentofalternative sources of energy. In Canada a youth volunteercorps movementis expanding,for young people in England it is almost the norm after leaving school to work for a timeinadevelopingcountry.Thereisnolawcompellingthemtodothis.Itisnot an alternative to national service, but there is a sense of social obligation. That is, it has become the norm to make a contribution, and not to do so might be viewed askance. The book describes attempts to introduce voluntary payments in practice. In some cases this was successful, in others, for particular reasons, it failed. There isaneedtoextrapolatefromthisexperience,andtoworksystematicallyinthefu- ture,adjustingtheapproachstepbystepinthelightoftheresultsobtained.Ifthese analytical and practical approaches are combined, there is a high probability that thenewinstitutionwilltakeoffsuccessfully.Isayitagain:wepaynoattentionto hownewinstitutionsappear,buttheyariseastheresultoftheactionsofparticular individuals,of‘mad’experimenters,andsubsequentlybecomethenorm.“Whatis thisnonsense?”peopleexclaim,laterconceding“Theremaybesomethinginthat,” beforefinallyexpostulating,“Oh,everybodyknowsthat.” Afurtherinterestingapproachistheattempttotakeanindividual’scognitiveand timeresourcesintoaccount,alongsidetheresourceswhicheconomicstraditionally looksat.Littleattentioniscurrentlypaidtothese,withtheresultthattheyarenot usedtobestadvantage.Atfirstview,theideaseemsimpracticable,buteconomics has, after all, long operated with a multiplicity of resources which are difficult to quantify.Indeed,theonlyreadilycountableresourceismoney.Westartintroducing such concepts as ‘conventional fuel’, ‘conventional coal’, or ‘conventional bread’. TheGermanMinistryoftheEconomybeganusingsuchconceptsbackinthe1930s. Nowadayswearetryingtodealwithmuchsubtlerandlesseasilydefinedresources. Take,forexample,transactioncosts.Analysingtheseisnosimplematterwhenap- pliedtoastraightforwardbusinessfirm.Howmuchmoreisthisthecasewhenwe turntotheculturalsphere.Inprinciple,however,wecanquantifythetimetopman- agers of enterprises lose standing in queues to see officials, and equally the time wasted viewing an indifferent film. Naturally, these costs differ from one person Foreword ix toanotherdependingontheirlevelsofincomeandself-esteemor,moreprecisely, onthevalueonepersonplacesonanhourofhistime.Economicslongagobegan operating with resources it was difficult to pinpoint exactly. This is unsurprising, becausetheageofcompleterationalitywhenthesciencescouldbeneatlydivided into disciplines has passed. That approach worked for centuries, but it is breaking downnowandsomethingelseneedstobefound. Whether Symbolic Exchange Economics will become established as a new branchofscholarlyenquiryisaquestiontowhichthereaderwilllearntheanswer only in 10 or 20 years’ time. At present we can already see that behind the vision propoundedherethereisanintuitionexpressedinthelanguageofeconomics.That intuitionwillneedtobefurtherdevelopedandproven.Themostimportantthingfor now,however,isforthepracticalaspectsofSymbolicExchangeEconomicstobe- comeestablished,fortheinstitutionsandpracticesitenvisagestocomeintobeing. Furtherscrutinyofthepremisescanbeamatterforthefuture. Therehavebeenworkswhichoperatedindifferentdimensionsinthepast.Karl Marx’s Capital is an outstanding example. It contains both a new idea, a new ap- proach,anewsystem,are-evaluationofearliersystems,andanattempttobuildthe future.Suchworkscanlodgeinpeople’smindsindifferentways:oneaspectinthe mindsoftheacademiccommunity,adifferentaspectinthemindofrevolutionaries, andsomethingelseagaininthemindsofordinarypeople.Thereiseventhepossi- bilityofacompletetravesty,ofthekindwhichbroughtMarxtocomplain,“Ifthat isMarxism,IamnotaMarxist!” Readersarefreetotakefromthebookwhateveraspectmostintereststhem.The contentsmakes it possible to concentrateon different aspects.Some maybe more interested in altering people’s outlook, in which case there is a need to popularise the specific reforms proposed here which people have not yet heard of. I suspect that for those sympathetic to this cause the scholarly underpinning may be of less interest. A different approach would be to perfect a scholarly model and defend it againstacademicopponents,butthattendstoleavelittletimeoverforsocialexper- imentation.Itwillbeforboththeauthorandhisreaderstomaketheirchoice.My ownpreferenceisforthepathofaction.Thosewhointroducenewinstitutionsare encounteredinhistoryfarmorerarelythanencyclopaedistsandpuretheoreticians. Thatisararegift,andtofollowinthefootstepsofRobertOwendemandsaspecial intellectandaveryspecialspirit. AlexanderAuzan Preface Severalyearsagomyfriendsurgedmetowriteaweightytomeonpracticalaspects ofculture.AtthetimeIdidn’tthinkofweightinessintermsofself-sacrifice,risking my reputation, and games theory, as I am inclined to now and for which I hope my reader will also develop a taste and a readiness. I instinctively put my trust in this recommendation, although I realised even then that the work would demand completededication.Iwasconcernedthatthesaidweightytomemightbedoomed toobscurity,becauseinourdaystheformatisnotthatpopular.Peoplegrudgethe timetostudygreatfolios.Bulkinessisacceptablenowadaysonlyforserialreading, wheretheeyesspeedoverthelineslikeanexpresstrain.Isthereanysurerwayof frighteningoffthosewhoenjoyreadingwhiletravellingthanphilosophisingabout culture?Forallthat,alavishlymanufacturedintellectualproductfitsadmirablyinto our idea of luxury, and a good third of the book is devoted to the economics of luxury. Ifinallydecidedtowritethebookwhenthedistinguishedarthistorian,Grigorii Revzin persuaded me that I would get nowhere writing piecemeal articles. I had alreadymadeanumberofnotundulysuccessfulattemptstosoundoffonindividual aspectsofmytopic.Thefragmentsdidn’tlooklikeaddingupparticularlybybeing put together in a brochure, and in general didn’t fit happily into a small format. I wouldtrytoputtwoorthreedozenexcitingideasintoanarticle,buttherewasno wayIcouldputacrossthetopicwhichmatteredmost—theneedtoplacemoneyat theserviceofculture. After I had more or less decided on the genre of the work, I received assis- tance from the most diverse, insightful, talented, highly erudite experts working ineconomics,culture,themedia,middle-sizedandbigbusiness.Manywell-known philosophers, economists, specialists in cultural studies and those involved practi- callyinculturalmatterspointedmeinthedirectionofimportantavenuesofenquiry in the material and provided valuable guidelines. Among my intellectual creditors were some who gave no particular weight to their advice and demanded no par- ticularlyhighcommissionforit,butwhoneverthelessgavemeextremelyvaluable assistance. I am particularly indebted to Valerii Podoroga, Vladimir Avtonomov, YaroslavKuzminov,andVitaliiNaishul. MycolleaguesatthePragmaticsofCultureFoundationhavebeenimmediately involved in preparing the book: at first Valerii Anashvili and Sergey Trukhachev, later Elena Lvova and Gleb Morev. I owe a particularly large debt to Yekaterina Men. Polina Giverts and Irina Leontieva excelled in collecting analytical material andmarketingresearch.Iwouldhavebeenlostwithoutthem. I particularly valued meetings with a number of foreign academics: David Throsby,WilliamJ.Baumol,andothers. Therehavealsobeenpeoplewhoseinterestinducedastateofproductivethink- ing. These include acclaimed thinkers like the Nobel Prize winner in Economics, A.Dolgin, TheEconomicsofSymbolicExchange, xi ©AlexanderDolginandSpringer-VerlagBerlinHeidelberg2009 CreativeCommonsAttribution-NoncommercialLicense
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