Here’s the blog summary of my paper ‘Economic development and the death of the free market’.

Blair Fix

I have a new paper out in the

 Evolutionary and Institutional Economics Review

. It’s called ‘Economic Development and the Death of the Free Market’. The paper explores a question that has long fascinated me: how do human societies change as they consume more energy? As you probably guessed, the paper’s title gives away the conclusion. Consuming more energy seems to involve less free market and more hierarchy.

The Long, Slow Death of the Free Market

A post in which I ask for money the radical political-economist way.

A few weeks ago I got an email from Wikipedia with the subject '*This is
a little awkward*'. I knew from the header that they were going to ask
for money. But I was happy to oblige. Wikipedia is one of the triumphs
of the internet --- a vast repository of knowledge that's free for
everyone. I use Wikipedia daily. So I was happy to support their work.

The Wikipedia email got me thinking about the business model of 'free'.
It's something that, according to neoclassical economics, shouldn't
exist. Think about it this way. According to neoclassical economics,
humans are selfish utility maximizers who act for their own benefit.
Individuals part with money only if they receive something in return.
But in the case of Wikipedia, donors part with money to receive
information that was *already free*. That's something a respectable
utility maximizer would never do.

And yet Wikipedia continues to exist and thrive. Why?

The answer is that there's more to human behavior than self interest.
Humans are social animals who have an instinct to help others. Wikipedia
depends on this instinct. It depends on people giving money to receive
something that's already free.

True, Wikipedia's business model operates at the fringe. Most businesses
don't give away their product for free. In fact, they can't imagine
doing so. As a representative for Ebay China [put
it](https://www.ft.com/content/0cfb9e78-8908-11da-94a6-0000779e2340){target="_blank"},
"Free is not a business model".[^1^](#fn1){#fnref1 .footnote-ref} To
earn income, most businesses rely on the act of *restriction*. They
restrict access to their product using property rights. So if you want
what they have, you have to pay for it.

The dominance of this paywall model tells us that humans are not purely
altruistic --- far from it. Imagine that Microsoft started giving away
its software for free. Would it continue to earn billions in profit?
Doubtful. The majority of people would use the software without giving
Microsoft a dime. So Microsoft's revenue would collapse. This tells us
that Microsoft's income depends on selfishness. People want to use MS
Office and so pay to get it ... because they must.

To many people, this self-interest model seems like the only way to run
a business. But it's not. Some businesses operate solely on good will.
Instead of paywalling their product, they give it away for free. Then
they earn income by appealing not to selfishness, but to *altruism*.

Take, as an example, the free software movement. I'm typing this post on
a computer that runs [Linux
Mint](https://linuxmint.com/){target="_blank"}, a free operating system.
(It's a beautiful OS --- fast and stable. I highly recommend it.) Like
Wikipedia, Linux Mint gives away its product for free. And yet it still
earns an income (albeit nothing like Microsoft). Linux Mint earns income
because some users give money for software that's free. It's a business
model based on altruism.

### Free knowledge

The email from Wikipedia got me thinking about what I'm doing on this
blog. According to neoclassical economics, my behavior is exceedingly
naive. I spend hundreds of hours doing research, and then I give away my
results for free on the internet. What am I thinking?

I give away my research because I believe that knowledge should be free.
Knowledge is our species' greatest asset --- the accumulated wisdom of
countless generations. It's a travesty, in my opinion, to restrict
access to this shared inheritance.

If knowledge is free, then how do researchers earn a living? One way is
to rely on the power of government. In this model, the government
collects taxes (coercively, if necessary) and uses this income to fund
research. The resulting knowledge is then given away for free. This is
how the public university system works ... in *principle*. But in
*practice*, most publicly funded research [gets
paywalled](https://paywallthemovie.com/){target="_blank"} by private
publishers.

This paywalling of research is a kind of reverse [tragedy of the
commons](https://en.wikipedia.org/wiki/Tragedy_of_the_commons){target="_blank"}.
Instead of over-exploiting a common-pool resource, we under-exploit it.
Knowledge that could be free for everyone is instead restricted to the
few who have journal subscriptions. (Fortunately we have
[Sci-Hub](https://sci-hub.st/){target="_blank"}, which, to the chagrin
of publishers, has liberated most scientific articles.)

Besides relying on government, how can researchers earn a living while
creating free knowledge? The other option is to use the Wikipedia model:
give away knowledge for free and then rely on the kindness of strangers
for support.

### This is a little awkward

Speaking of the kindness of strangers, that brings me to you, dear
reader. On this blog, I give away my research for free. In return, I
hope that readers like you will support my work.

If you're already a
[supporter](https://economicsfromthetopdown.com/supporters/){target="_blank"},
thank-you! If you're a new reader, here's a little bit about this site.
I started *Economics from the Top Down* on a whim. I was tired of
writing academic papers and wanted to communicate my work to a general
audience. So in April 2019, I started this blog.

What happened over the next year and a half surprised me. *Economics
from the Top Down* became far more than a hobby. It's now my primary
research outlet. Since April 2019, I've written over 200,000 words here
--- enough for a sizable book. But that's just the tip of the iceberg.
Because this is a blog about *new* research, the underside is that I've
done a ton of analysis. I've written about 18,000 lines of code and made
over 300 charts to communicate my results.

I've been driven to do this by you, the reader. Over the last year and a
half, *Economics from the Top Down* has had 150,000 views. Given that
I'm writing primarily about new research, I'm thrilled with this
attention. So thank-you, readers, for joining me on this journey.

If you enjoy my research, consider [becoming a
patron](https://economicsfromthetopdown.com/membership/){target="_blank"}.
Yes, you'll be paying for something that's free. And that's exactly the
point. Your altruism will help me keep my research where it belongs ---
in the public domain.

Cheers!

Blair

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P.S. My next post is going to analyze word frequency in economics
textbooks. As part of that post, I've been asking people on Twitter to
guess the most popular English word that's *missing* from econ
textbooks. Join the discussion
[here](https://twitter.com/blair_fix/status/1313428015947427844){target="_blank"}
and
[here](https://twitter.com/blair_fix/status/1314228724825567234){target="_blank"}.
If you're not on Twitter, you can send me your guess using the [contact
form](https://economicsfromthetopdown.com/contact/){target="_blank"}.
(No one's guessed correctly yet.)

\[Cover image source: [American Libraries
Magazine](https://americanlibrariesmagazine.org/2015/09/08/open-access-publishing/){target="_blank"}\]

### Notes

::: {.section .footnotes}
1.  [Hat tip to Jonathan Nitzan and Shimshon Bichler for [finding this
    quote](https://blairfix.github.io/capital_as_power/accumulation-and-sabotage.html#strategic-sabotage){target="_blank"}
    from Ebay.[↩](#fnref1){.footnote-back}]{#fn1}
:::

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A few weeks ago I got an email from Wikipedia with the subject ‘

 This is a little awkward

’. I knew from the header that they were going to ask for money. But I was happy to oblige. Wikipedia is one of the triumphs of the internet — a vast repository of knowledge that’s free for everyone. I use Wikipedia daily. So I was happy to support their work.

The Business of ‘Free’

I continue to explore how our evolved sociality explains resource distribution. I discuss the power ethos — the idea that individuals get resources in proportion to their social influence.

A 25% chance

. That’s the likelihood that when I tell someone I’m searching for a job, they’ll say: OK, maybe I’m exaggerating this chance. Still, it’s an open secret that when it comes to landing a job, it matters who you know. Many people, it seems, like to remind me of this fact.

Messaggi di Rogue Scholar

The Long, Slow Death of the Free Market

The Business of ‘Free’

An Evolutionary Theory of Resource Distribution (Part 2)